My question is not about the setup, that's OK. I am wondering why CrashPlan shows the encryption key in the clear and does not store it in the user or system keychain.
As others have noted, it is partially because Crashplan is a Java based app. Partially, it is also because Crashplan runs as System, not as the user. That way, I can have Crashplan backup my wife's user account and my user account.
Furthermore, you can use the encryption key + a custom password, or your own encryption key with a passphrase. In this case, it is encyrpted locally and the key is not sent to Crashplan[1].
[1] http://support.crashplan.com/doku.php/recipe/change_security...
I'm assuming this because their desktop client is a java app and it it's been made to run on linux, mac and Windows. Is there such a thing as a keychain on Windows? I've only used it on linux and mac.
Yes, there's the CredWrite API - http://msdn.microsoft.com/en-us/library/windows/desktop/aa37..., although I must admit I like the OS X keychain a lot better.
However, you can also secure the encryption with a password not associated with the account. Or even provide your own 448-bit key. If you do either of these options, CrashPlan support will not be able to help you
This setup allows CrashPlan to easily help non-technical home users, while allowing technically savvy users to securely hang themselves with their own encryption.