According to Microsoft:
An Enhanced Storage device can be an external USB hard drive or a USB flash drive. When you purchase a USB hard drive or flash drive, the packaging might indicate that it's an Enhanced Storage device.
Microsoft have created a technology that helps protect user data on portable storage devices that allows for additional security.
In their own words:
Enhanced Storage devices have built-in safety features that let you control who can access the data on the device by using a password or a certificate (if the device is being used in a workplace). Once someone has access to the device, they have access to the data because the data on the device is not encrypted.
However, in regards to encryption, Microsoft states:
Some device manufacturers might offer encryption on Enhanced Storage devices. Check the device packaging or documentation to see if the device includes encryption.
Source (now archived): What is Enhanced Storage?
(I will investigate how to turn Enhanced Storage off, but I have a feeling you won't be able to because it is implemented on the external device itself... I will report back with a more definitive answer though.)