What steps will reproduce the problem?
Create a new annex, add a new repository:

  git annex initremote vserver2 type=rsync rsyncurl=vserver.dbruhn.de:/annex encryption=dominik@dbruhn.de

Add some files, add them to annex, try to transfer them:
  git annex transferkey SHA256-s6486446--df84b11a0e9543134224d0ac1e0f2567bcd79d86605117c5af008a1b133cee3a --to vserver2 --file MKBD/OB.mp3 --debug

What is the expected output? What do you see instead?

I expect the file to be transfered to my remote server. Instead I see a 'gpg>' prompt with nothing happening. When pressing CTRL+C, the following mesage is shown:

gpg: Interrupt caught ... exiting

There must be some faults when interfacing gpg. The other console-output is:

-----
    [2012-09-08 18:50:12 CEST] read: git ["--git-dir=/home/dominik/Annex/.git","--work-tree=/home/dominik/Annex","show-ref","git-annex"] 
    [2012-09-08 18:50:12 CEST] read: git ["--git-dir=/home/dominik/Annex/.git","--work-tree=/home/dominik/Annex","show-ref","--hash","refs/heads/git-annex"] 
    [2012-09-08 18:50:12 CEST] read: git ["--git-dir=/home/dominik/Annex/.git","--work-tree=/home/dominik/Annex","log","refs/heads/gitannex..245fa80db6733dbbeff6c40d46bd65ed00811548","--oneline","-n1"] 
    [2012-09-08 18:50:12 CEST] chat: git ["--git-dir=/home/dominik/Annex/.git","--work-tree=/home/dominik/Annex","cat-file","--batch"] 
    (gpg) [2012-09-08 18:50:12 CEST] chat: gpg ["--batch","--no-tty","--use-agent","--quiet","--trust-model","always","--decrypt"] 
    [2012-09-08 18:50:12 CEST] chat: gpg ["--batch","--no-tty","--use-agent","--quiet","--trust-model","always","--passphrase-fd","8","--symmetric","--force-mdc"] 
    sdgdg
    dsgdgs
    ^C
    gpg: Interrupt caught ... exiting
-----

What version of git-annex are you using? On what operating system?
git-annex version: 3.20120826
Ubuntu 12.04, GHC 7.4.1
gpg is 'gpg (GnuPG) 1.4.11'

Please provide any additional information below.

The key which is used for the remote is password protected. The GnuPG Agent asks me for the password, so this seems to work. I do not know what content the gpg expects but does not recieve. The .git/config entry for the remote looks reasonable:

    [remote "vserver2"]
        annex-rsyncurl = vserver.dbruhn.de:/annex
        annex-uuid = ea3d6acc-716c-48e8-9b6b-993b90dcc1db

When adding a new rsync-remote with encryption set to 'none' (therefore disabled), everything works, so it really seems a gpg issue.

How can I help debugging?

> Thanks, I reproduced a deadlock in the gpg code, which was introduced
> with some of my earlier changes to use threading. No released version of
> git-annex was affected, and I have developed a fix, which works for me
> and is now committed to master. Marking this [[done]]; please do check
> that my fix works for you! --[[Joey]]