If drive encryption is done at the folder-level, do all the files inside the folder get encrypted as well?
Yes, the files inside the folders will be encrypted. All the files will have the same password that was used for encrypting the folder.
If drive encryption is done at the folder-level, will it also encrypt the files in the sub-folders too, if there are any?
Yes, they will also be encrypted.
If I add a new file into an already encrypted folder, will the new file get automatically encrypted?
Yes, it will get automatically encrypted with the password of the folder-level encryption.
You cannot apply encryption for a Team Drive, the option is not even displayed when right-clicked. But for the files and folders under the TeamDrive, encryption works the same way as Drive.
I write custom scripts in his sheets. Apparently, each time he decrypts the sheets the script is deleted. Is this as per design?
This is a technical limitation from Google. So, scripts in the sheets will be lost when it is encrypted-decrypted.
Is the pass word decryption a one time thing, or will the file automatically re encrypt on its own?