The answer to this question depends on the version of IOS that you are running. Traditinally the tacacs server key was in clear text and there was not a way to encrypt it. In recent code Cisco has included the tacacs server key in what is encrypted when you configure service password encryption. I have routers running 12.3 in which the key is encrypted. I am not clear at what version the change was made but suspect it probably was in going to 12.3.
HTH
Rick
HTH
Rick
