Rainbow tables are used to decode Hashes, not encryption. A rainbow table is just a list of precomputed hashes for some set of possible input.
So if you pre-compute the hash for every possible windows password, when you want to recover an unknown password, all you need is the hash from the SAM database and then look it up in the rainbow table. The rainbow table then gives you a password which will correspond to that hash. This is complicated by password salt, but that's the basic idea.
Rainbow tables don't help with breaking encryption. Theoretically you could pre-compute all possible cypher-text for all possible keys and all possible plain-text input, but you'd probably require more bits to store this data than there are atoms in the universe, not to mention that those atoms would probably have boiled away to nothing before you get there. It would be quicker (albeit still prohibitively slow) just to brute-force the key.
