Error publishing policy

There is no way to restore default settings.

Note that deletion of protection template is very dangerous thing. Content protected by this template cannot be read after the template is deleted. You should always rename and archive the template in case you want to reuse its name for another label, and you should delete the template if you are completely sure you didn't use it in order to encrypt any production data.

As for your issue I would recommend you to export your settings and verify that you don't have duplicate names. While importing localization xmls you should also verify you don't have conflicts for the name in every specific language. 

If you don't have any duplicate names between labels and templates and still experience the issue, please open a support ticket in order to investigate the issue.