Is it possible to run HD derivation with an encrypted master node or seed? Given either a seed or the private part of a master node, that is encrypted using AES-256-CBC (or another secured symmetrical cypher) with key K, is it possible to run derivation such as described in BIP32 to obtain derived private keys also encrypted using the same algorithm and the same key K?
It seems like you are looking for an encryption scheme which allows operations to be performed on cipher text, which would result in the same as the same operations being applied to the unencrypted data.

Example: Homomorphic encryption which supports addition


E(data0) + E(data1) = E(data0 + data1)
k being the encryption key, and E(...) the encrypted cipher text.


In then case of HD keys, the desired encryption scheme would need to enable the following


hd_child_derivation(E(m)) = E( hd_child_derivation(m) )
hd_child_derivation() involving a HMACSHA512 function and EC-point operations


I am not sure which encryption schemes would fulfil the above requirements, but fully homomorphic encryption schemes seem to be possible: https://crypto.stanford.edu/craig/craig-thesis.pdf