Tested with VS-Desktop-3.3.90.8-Beta and the test gpgol.dll from 2025-09-10 and the same test mail from the original report:
The spawning cycle does not occur any more. (Tested with Outlook setting "show as text only" and without.)

I think it is save to say that we will not implement pgp/inline encryption with attachments

tooltip suggestion for d, not trusted and expired:
Ask the sender for an updated certificate and when you receive it, follow the procedure to establish trust and certify it.
or:
Ask the sender for an updated certificate. When you receive it, you need to establish trust and certify it.

the issue is the same in Gpg4win-5.0.0-beta357:

We decided to remove one more item:

• Copy to card

Because it is only doe once, usually.

The reporter in the forum originally wrote:

We need a better error code from gpg to change this

We decided that gpg should emit a status message for success, too.
gpgme should then look for that status message instead of only absence of error.

Although in VSD 3.2.2 we get no warning when configuring S/MIME debugging wrong we then get a nice message "Configuration error" when trying to encrypt with S/MIME, instead of gpgsm hanging without any message at all:

The issue also occurs in VSD-3.3.2 and 4win-4.4.1 but not in VSD 3.1.26

works in vsd3.3.3, tested with VS-Desktop-3.3.90.8-Beta

OK on Linux now with new enough versions (Fedora 42).

Tested with Fedora 42 (which includes gpgme 1.24.3): this works now, you can drag a public or secret key from Kleopatra to a file manager to export the public key.

Finally came around to check this.
On Fedora with Kleopatra 25.04.03, gpg 2.4.5 and pinentry 1.3.1 the pinentry window ist above the Kleoaptra windows.