This message tells that at least one of the objects that you've selected is encrypted using V1 cipher, which doesn't support Secure sharing.
Enabling V2 cipher affects only objects uploaded after enabling that option, but doesn't automatically migrate the existing ones. These are already "encrypted" and materialized using V1 cipher.
In order for share to work in your case. We would need to fallback to insecure V1 sharing for all objects (even those encrypted with V2), but we didn't want to mix V1 "insecure" approach when V2 mode is selected.
In such case in order to share these objects you would either need to migrate them to V2 (reupload) or disable V2 mode temporarily, which will use insecure V1 approach for sharing.
In the future we may provide additional tools to ease migration from V1 to V2. (edited)