I remember Support telling me a couple years back that if the backups are placed on a network share, MIG won't work to protect the backups from unauthorized access or modification.
How can ransomware do this if the backups are password-encrypted by a AES256 encryption and a strong, long password? I have been looking for an answer online to no avail, the password doesn't seem to be stored in any XML files unless I'm mistaken
Data that is already encrypted can be re-encrypted. If you do not have the decryption key, then you cannot decrypt the second round of encryption (ciphertext) to be able to then de-crypt the first round of encryption - which uses a different key (crypto variable).
Encryption is not a protection against additional encryption. The only protection there is against unwanted encryption is as follows:
1. Don't have the data in the first place.
2. Permit only trusted persons, processes, or technologies to access the data.
3. Use strict access control, permissions and privileges.
4. Use logical or physical separation (meaning that access through any means is not possible; no packet transfer between systems).
This is why storing your most valuable data on a 15 Euro USB Flash Drive is one of the most secure methods possible. But since people are lazy enough that they don't want to connect, transfer data, disconnect the USB flash drive, there are products like Macrium.