GPG integration in KMail 1.10.3 + kabc

As I usually do, I have copied in my addressbook, and the necessary files into 
~/.gnupg.  However, I am seeing some very strange behaviour (KMail 1.10.3).

KGPG lists all my keys, but KMail doesn't seem to see them.  I can't set keys 
in the Signing and Encryption dialogues.  I see 'Fetching keys' and a progress 
bar that runs endlessly.  If I clear the search field I see a list of keys, but 
the list appears to be old and only has my old, expired key.  It's definitely 
not the list that KGPG shows me.

Then there is the problem of the friend who sends encrypted mail.  I have 
always replied in encrypted.  However, because I can't set the keys (as 
described above) it tells me that if I send the message I will not be able to 
read my copy.  This despite making sure that neither 'Sign' nor 'Encrypt' 
buttons on the toolbar are used.  In the end I sent a message signed and 
encrypted, despite dialogues telling me that I couldn't since I don't have a 
key set.  The message was sent, and my copy is signed and encrypted, and 
pinentry-qt asked my passphrase, then decrypted it.

One further comment is that the addressbook no longer has encryption 
preferences for contacts, so I didn't even have the option of temporarily 
turning it off.

I don't know where to go from here.

Anne