This got posted to the Virtualization channel by mistake.
I have a OnTAP 8.2.5 (7-mode) system and have been using PowerShell scripts to generate reports from a windows 2012 server. I upgraded the Server to Windows 2016 and the scripts now fail performing the connect-nacontroller command.
Most likely the change in Windows version also made some changes with regards to type of encryption supported. Since the error is specifically calling out key length, have you tried generating a new, longer key in Data ONTAP?