Never mix a Cygwin version of gpg with the regular one. gpg takes the
passphrase as-is. If an outer layer (e.g. Cygwin or WinPT) does some conversion
to the passphrase the same passphrase won't work on anther system

I had no other idea how to narrow down the problem. Decryption used to work with
WinPT. Because it no longer worked as of version 1.0 I tried to decrypt directly
calling gpg that came along with gpg4win (which didn't work either). So I tried
to use an older version of gpg in order to proof if the keyrings are ok and working.
I had no copy of gpg version 1.4.4. As far as I remember it worked up to and
including gpg 1.4.4. Cygwin's gpg proved that the keyring's and the passphrase
are working.
Hence I concluded that it must be a problem of gpg 1.4.5

I'd check if it works with gpg 1.4.4. But I couldn't find any location for a
download. gpg4win just keeps the lastest binaries as well as gnupg's web site.

I tried to descrypt with different versions of gpg. But all failed. The only one
working is 1.4.2.1 from the cygwin package. Then I reinstalled version 1.4.5
from gpg4win 1.0.6 package. Typing in the passphrase constantly fails, but when
the passphrase is stored in an environment variable and piped into gpg (called
with --passphrase-fd 0) then decryption works fine. My passphrase contains some
special characters of the iso88591 characterset for security reasons. But this
should not make any difference. But I suspect it's a matter of charactersets
when reading the passphrase. I suppose it's not being read from stdin (fd 0)...

There is now an index page at http://ftp.gpg4win.org/ you may use to get any
older version.

Using Virtual PC I installed a fresh Windows XP Professional version including
SP2 and gpg4win 1.0.6. I can only confirm the behaviour mentioned before:

• Encryption of clipboard (WinPT) works fine
• Decryption of clipboard (WinPT) fails
• Decryption with gpg (1.4.5 gpg4win package) command line (cmd.exe) fails
• Decryption with gpg (1.4.5 gpg4win package) command line (cmd.exe) with

--passphrase-fd 0 (don't know how to get it working: neither pipe nor typing in
works)

• Decryption with gpg (1.4.5 gpg4win package) command line (CygWin) fails
• Decryption with gpg (1.4.5 gpg4win package) command line (CygWin) with

--passphrase-fd 0 option succeeds.

Any idea hint is appreciated.

It seems to be a charset problem. I installed WinPT 1.0.0-pre0 and modified the
passphrase replacing international characters with correspondig characters of
the 7 bit character codes: e.g. replacing ä by a. Using these characters only
decryption works with the very same keyrings.
Hence I'd suggest to
a) display the default characterset along with --version option
b) provide an option to display the charcter set being used
c) clarify the scope of the character set (reading stdin, file, passphrase, etc...)

I don't understand why - e.g. in the very same CygWin session - decryption
doesn't work when entering the passphrase when prompted in contrast to pipe the
very same password into gpg.