What do you mean by encrypt the email notifications? Can you describe in more detail what it is you want to accomplish?
The only option available with the SEPM as far as email notifications go, is to enable encrpytion of the communications between the SEPM and the mail server:
http://www.symantec.com/docs/TECH169363
This means that the SMTP session will be encrypted, but the actual email itself will not. It is currently not possible to encrypt the actual email itself, as that would require incorporating some sort of full email client into the SEPM.