Here's an update for anyone that may be interested in this issue. I have identified problems with the encryption routines but have also (I think) found the culprit.
It appears that changes were made to 'rsabase.dll' related to the 128 bit encryption standard. _cryptapi calls are utilizing this DLL on the O/S. Different versions are available in the installs & service packs. Other versions are installed with applications such as I.E., Office, etc. In every case that I found problems & tested, the workstation's rsabase.dll version was older than the one used on the test machine. So my advice is to make sure each O/S has at least the same version of this file or newer by updating with service packs or by installing another application that contains an equal or later version.
In every case (so far) when these were updated the encryption issues went away.
Note: Windows XP uses 'rsaenh.dll' instead of 'rsabase.dll'
Details of versions and releases are available at:
http://support.microsoft.com/default.aspx?scid=/servicedesks/fileversion/dllinfo.aspHope this helps someone.