The dude db is in clear text ( as of 30b7 - down to 2.1). ( eg. ip of router, password are readable strings)
Could this be encrypted in some way ?
It might pose some risk from someone who can have access to your data, eg. starting from a livecd or some other way, if you stored the passwords in the dude…
you could use windows file encryption maybe. I mean hey at least we know its plain text so we can plan for it. As you said if you can touch the box you can own the box so keep the server room locked 
That is a security plan absolutely not dependant on dude. It relies on the os and the user.
I would make it further harder to read.