I just purchased phpdock and think there may be a version compatibility problem with phped and phpdock. I created a table in a database using the phped dbclient and php dock reported that the database was encrypted or corrupt.

Could it be that phped is using sqlite 3.0 and the php in phpdock is using 2.8?

Db Client in phped supports both sqlite 2.x and 3.x.
Regarding PhpDock, it has very little relation to sqlite because it runs php and whatever is supported by PHP is supported by PhpDock.
As of v5.1.6, php supports sqlite 2.x through its php_sqlite.dll and version 3.0 through php_pdo_sqilite.dll (PDO interfaces)