Do I need AD to use EFS?, part 2

You are correct. The answer was not a tutorial on how to set up this type of storage, but of course the users' EFS public key must be available. This can be accomplished either by using roaming profiles, or by exporting and importing. If no key is available, however, a new EFS certificate may be generated on the server. (This, of course, can be a problem, since the users' local private key will be different than that on the server and now two keys need to be backed up.) If, however, there is no delegation and no key on the server, the file is encrypted locally in a temporary file using the user's EFS public key, then it is sent to the server. When the user next accesses the file, it is downloaded into a temp file and then decrypted using his local keys.