Hi,
I am a newbie too, but I am wondering what you want to do:
*compare software (thus with a Nios processor) encryption/decryption with a full hardware system written in verilog
OR
*compare software with software+C2H (hardware acceleration) which is an automatic verilog file generated from some C code functions.
By the way, SOPC allows you to build a system on chip, by adding a Nios processor, some memory, etc.
If you want to write your own hardware blocs, Quartus provides you the right environment. You can mix the two by creating a part of your system with SOPC and the rest in Quartus by adding some custom verilog written blocks.
Nios IDE allows you to program the Nios processor you added in SOPC, and actually you can "convert" some C code into hardware blocks with C2H, but you don't have to go back in quartus.
About the inputs, add a JTAG_UART component in SOPC, and use STDIN in your C code. You will be able to enter your text string through the terminal. But there is certainly other solutions...
I hope it will help you,
Sacha