I was just trying to figure this out and I came across your post. Here's the solution that worked for me:
DTSRun /S"Server" /N"Package Name" /E
The tilde (~) is a switch that tells SQL Server to expect the information to be encrypted, so you don't need that in your case. When you right-click a package in SQL 2000 and select schedule, SQL Server defaults to creating the command string as encrypted. However, if your package doesn't have a password in the job, then I don't see a need for using encryption in the job step. Also, the /E specifies a trusted connection.