During an upgrade of PeopleTools, the usual process of exporting the old Application Designer configuration, then importing it into the new PeopleTools works without a hitch. It seems that in PeopleTools 8.55, at least one of the configuration fields has changed.
Attempting the process without making the change results in the Error: “Your security options are set improperly. Please contact your security administrator”. This vague message is no help to the situation.
The problem lies with the [Startup] section of the config file exported from the older version of the App Designer. In that section, there’s a field called ConnectPswd. That field has been deprecated and replaced with ClientConnectPswd. At the same time, the encryption algorithm has been changed. The old password encoded as a 12 character encryption. The new password is 40 characters long. Unfortunately, one can’t just change ConnectPswd to ClientConnectPswd and save.
One solution, of course, is to not import config, and manually configure your App Designer. Another (and probably best) solution, if you must import a config file, is to type the correct password into App Designer 8.55, export the config file, add the ClientConnectPswd line from that config file to the older config file, then re-import the older config file to get the rest of the settings.
Many thanks to Stuart Campbell for troubleshooting this and finding the solution.