Ok found the details -
when we do the checkpoint, package components are extracted from the Target server and kept as an encrypted file in the server(where deployer is installed), the encrypter file is located in the persist folder as told by D.C.
All the bulds, mappings, checkpoints are present under the persist/project folder.
Reason I explored this location is to have multiple checkpoints. (With deployer GUI, we can have only single checkpoint to which we can do the rollback)
Now I suppose we can change the checkpoint file names as bkp, and create the fresh checkpoint. Not very sure of this approach.