This Knowledge Base Article may be of help.
Does the PGP keyring contain the public key for the person your GM wants to encrypt to? Does the User ID contain the email address the email is addressed to? Is is signed by the GM's key? Does it show as Verified in All Keys, in PGP Desktop? Is the key showing as not being expired or revoked? If you right click on the key and select Key Properties, and then check the Key Usage setting, does it have PGP Messaging enabled?
Are the settings for your servers in for your PGP messaging service set correctly?
Have you made any change of PGP Options from the default settings?
Have you made any changes in the PGP Messaging Service settings?
Probably a silly question, but is the GM actually using the Outlook PGP buttons to set the email to be either Encrypted or Encrypted and Signed before sending the email?