If you don't want to affect Textbox1, then don't assign to it...
Change
If myTextBoxChar = arLetterChars(i) Then Textbox1.Text = Textbox1.Text.Replace(myTextBoxChar, arEncryptedChars(i))
To
If myTextBoxChar = arLetterChars(i) Then Textbox2.Text = Textbox1.Text.Replace(myTextBoxChar, arEncryptedChars(i))