I realize this was answered a while ago, but to give a couple examples to Tyler's good answer:
I plan to use his #1 to tie a password to a service account and use a Powershell cmdlet to grab it. That way the scripts do not need to be as heavily modified. The service account's password is in Active Directory and would have to be compromised first. This works for me since I have use it on two servers. For his #4, to meet our compliance we were able to store a key in plain text on another server with external storage because that storage was itself encrypted and access to it restricted. As Tyler mentions the latter doesn't seem so secure, but it was good enough even for a tough assessor.