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Are you using the new beta version?
As in the builds from http://blog.digsby.com/archives/47 / http://forum.digsby.com/viewtopic.php?id=2116
OTR Support
Please add support for OTR or some compatible encryption mechanism. This will be especially helpful for those of us using wireless networks.
from: http://www.cypherpunks.ca/otr/
Off-the-Record (OTR) Messaging allows you to have private conversations over instant messaging by providing:
Encryption
No one else can read your instant messages.
Authentication
You are assured the correspondent is who you think it is.
Deniability
The messages you send do not have digital signatures that are checkable by a third party. Anyone can forge messages after a conversation to make them look like they came from you. However, during a conversation, your correspondent is assured the messages he sees are authentic and unmodified.
Perfect forward secrecy
If you lose control of your private keys, no previous conversation is compromised.
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