I’m an AxCrypt user, totally unrelated to the development of AxCrypt, but I can confirm that recursive folder encryption is not yet supported.
Recursive means folders within a folder. For example:
In my example above only File 1 and File 2 will be encrypted. The ‘Finances’ folder won’t be encrypted unless you manually select it.
The developer has promised that recursive encryption (i.e. the ability to encrypt everything within a folder: folders within folders) will be introduced shortly. It had been omitted because people had inadvertently encrypted critical folders!