According to the text books, the difference is subtle and mostly pointless. Encoding works on word boundaries (or some similiar high-level chunk), Encrypting works on character boundaries (or some low-level chunk).

Basically you encode if you are taking the data's structure into account (such as translating code words from one to another, or translating alpha-numeric text into alpha-numeric text). You encrypt if you aren't taking the data's structure into account (such as translating bits into bits, or translating alpha-numeric text into alpha-numeric text).

Yeah, I just repeated myself. That's to illustrated the ambivilic nature of the definitions. So basically don't really worry about it. Hope that helps :) .

Ciao,
Gryn