I think you are referring to DRM rather than simply encryption.... I have never heard that the wav format supports any form of DRM... I'm pretty much certain it does not. But even if it did, that would not prevent UpdateMedia from scanning it into the database as all it is interested in is that the extension is .wav
.wav's are playable with LMCE assuming the codec used is supported by xine.... really can't give you any pointers other than find a sample wav file from somewhere (Windows has samples) and put that in the same folder. If after 2 mins, it is visible then it is something to do with the wav files themselves, if it also isn't visible then there is something wrong with your installation of LMCE...