Zip archives can have multiple passwords for different contained files. Files within an archive are essentially independent of each other - they are compressed without regard for other files, and they are encrypted in the same fashion. Your
encrypted.zip will have two (or more) encrypted segments, one with your original password and one with the new one.
unzip the file would prompt for both passwords:
$ unzip ../test.zip
[../test.zip] file1 password:
[../test.zip] newfile password:
The directory, the listing of file names, is not encrypted. This is not a bug, though it can be confusing and not all zip tools handle the situation well (particularly graphical tools).