OK, In case anyone wants to know, I got to the bottom of this.
The chain is pretty easy to work out:
Create Service Master Key (automatically done upon install)
Create Database Master Key (user creates their own key)
SymetricEncrypt(Service Key,Database Master Key) -> Store Encrypted Master Key into Master DB
Create Certificate
SymetricEncrypt(Database Master Key, Certificate Private Key) -> Store Encrypted private key in Master DB
Create Database Encryption Key (system creates a random key, but must be manually added to database)
ASymetricEncrypt(Certificate, Database Encryption Key) -> Store Encrypted DEK into database.
So, to decrypt the database data, you'll need to:
Use the SMK to decrypt the DMK
Use the DMK to decrypt the cert private key
Use the certificate to decrypt the DEK
Use the DEK to decrypt the database
The starting point is the Service Master Key... how is this stored (if you encrypt it, you can't retrieve data, and if left in plaintext your system is exposed).
The answer is, the SMK is encrypted with Data Protection API, which is a service built into windows.
Basically, data is encrypted with "secrets" from your user profile. So the same user profile must be used to decrypt the SMK.
Now that I know this, I can use DPAPI in my applications to encrypt my encryption keys :)
Best Answer
AFAIK, no.
This depends on the HSM, the driver they provide which you need to have installed and loaded into the SQL Server process space but generally it will be cached for an undetermined period of time.