I understand that stored procedures can be encrypted so stored procedures can still be used by suppliers/developers without revealing their code.

This doesn't surprise me at all. It's the same with so many aspects of IT today! Developer/User productivity improves but usuall at the expense of efficiency.

In days long past...

I don't know if this helps? I encountered a similar problem when I detached a database which was marked as the default database for my Windows user Id. Once detached...