If you encoded your files with NuSphere Nu-Coder - PHP Encoder and wnat to debug them - you can do it!

It's simple. Most likely you have the source files, the non-encoded ones. Create a project pointing to them, set Run Mode to HTTP/3rd party web server, then set "remote root" the same as DocumentRoot in the
Apache or IIS settings - or whatever is the root of your website happens to be, and URL pointing to it appropriately and copy encoded files to the server.

After that each time you "run with debugger" a local file, server's copy will be actually executed but IDE will still show you the file you initiated to run.
This way you can debug encoded files.

We have an unencoded application which includes certain encoded (Nu-coder) files (in a separate encoded application). Is it possible to "step-over" these encoded statements whilst we are debugging our applications? What seems to happen is that as soon as the debugger reaches an encoded file, it gives a transliteration error. We will not have access to the source of the encoded files but we only need debug capability in the un-encoded files?

If you encode files in your project, you can turn on Debug Info option. In this case the encoded files will contain necessary info about lines and debugger hooks. But anyway, no sources will be in the files. So you need provide PhpED with local copy of the sources and you'll be able to debug encoded files. Debugger will step through encoded scripts on remote server while IDE will show you stepping through sources in local files.