Both versions of AxCrypt can be used without ever connecting to ththe internet. Version 2 provides an Always Offline mode.
As for operating within a separate window you never need see AxCrypt 2, apart from the initial login, as you only need to double click a file to open it; no additional windows involved.
For your argument against the window to make sense you’d have to dislike version 1 because you always see the AxCrypt window: for encryption and then for decryption. Then you must remember to encrypt your file again once you’ve finished with it in version 1.
Both version of AxCrypt ar open source. You can freely download the source code for Windows to see “what’s going on”. No secrets in how it works.
If you don’t use a password manager then it’s all the more reason to use version 2 – using a base password with a few changes is incredibly insecure. Using multiple, strong passwords is a recipe for disaster as the likelihood of forgetting the passwords increase. You can always use offline password managers like KeePass or purchase a hardware password manager like MooltiPass. You can even write them down on paper as long as you keep it safe.