I am using BE 2012 SP1a and I am unable the select an encryption key because the drop-down box is not populated.
This shouldn't be this way. I tried the function on my system and it is working as expected. For troubleshooting purposes, have you attempted to close BE and then re-open? Have you attempted to stop all BE related servers and restart them?
Has this worked for you in the past or is this the first time you attempt the use of an Encryption key?
Silly me. I restart of the BE services cured the problem.