Basically, as Colin mentioned,if you do not enable any software encryption, just about anyone smart enough can read the backup data with little fuss. Plug it in, restore with BE or even NT Backup, and bam! All of your data readable.
Using Software encryption, all data is encrypted on the source, sent over the LAN encrypted, and written to disk/tape in an encrypted format. That would be preferred in your scenario given.
Without the encryption passphrase, the files are useless.