Can't reader extend with a 256-bit encrypted form

I'm using Licycle Server 8.2 and a form built in Designer 9.0, design protected with 256 bit encryption.  When I go to reader extend the file, I am prompted to enter the correct password, I do, but it doesnt unlock.  I am then pompted over and over again to enter the password (see screen shot).

Do I have to upgrade the server to 9 in order to reader extend a 256 bit encrypted form?

Please someone help