My wallet.dat is encrypted and I did not enter my passphrase, yet my debug.log says:
2014-04-18 01:37:47 RegisterAsMasterNode
2014-04-18 01:37:47 Found unspent output equal to nValue
2014-04-18 01:37:47 Is capable master node!
2014-04-18 01:37:47 Adding myself to masternode list CTxIn(COutPoint(de7dc202c4237ec63718b461a020fde5cc8d29b6d0a18634b1965bc93c75e0c3, 0), scriptSig=)
And the "masternode list" command returns a list with my IP address on it.
I just tried to duplicate that and it said:
$ ./darkcoind masternode start
error: {"code":-1,"message":"Your wallet is locked, passphrase is required\n"}