When signing with a Smartcard and the Smartcard is not inserted GpgOL will show the "encrypting ..." overlay and disable the outlook window.
The Pinentry dialog to insert the smartcard is never shown, though. In the GPGME log I can see that pinentry launched. My suspicion is that the AttachThreadInput trick we use to bring pinentry to the foreground, and which now is implemented in qtbase causes pinentry to attach to a disabled outlook and not to our enabled overlay.
I am curious though why this only happens for Smartcards and not with the general password entry field.