There was an error encrypting or decrypting credentials. Either a credential update is currently being performed, or you must update the farm account credentials on this server before you can perform this task.

I got this error in SharePoint 2007 while trying to perform Password Update while using STSADM command. I followed the below steps to fix the issue.

1. Login into your SharePoint site with FARM Credentials/Full Control User Credentials who have full control to SharePoint Central Admin site.
2. Click Operations tab.
3. In Operations page go to Global configuration.
4. Under Global Configuration click on Timer Job Definitions link.
5. In the timer job definitions page check for “Application Pool Credential Deployment job definition”.
6. Deleting it will fix the issue.