When you edit an application, in 'Administration' mode you now have a new button named 'Domain Settings'. It enables entering credentials in order to connect to protected active directories.
You have a test button to check if the domain is accessible with provided credentials. You can also provide a group name and check if all users from that group can be read from the AD.
Credentials are encrypted to the XML file as any other credentials when you use 'My Settings'. When you publish the application using Click-Once, they are encrypted to the template itself.