Outhouse Express breaks with PGP-MIME and can't handle PGP Traditional either because mutt uses the msg.pgp as the filename. Line 1664 of pgp.c contains the problem. Patch is trivial, but not attachable from the bug submission page.
Created attachment 6969 [details, diff] change msg.pgp to msg.txt so Outhouse knows how to display it
Created attachment 6977 [details, diff] a better patch My first patch only fixed the problem in some cases with some versions of Outhouse Express. This patch does exactly what is now done upstream in mutt CVS.
If I understand correctly, it means that mutt-1.5 does not need your patch ? Have you tried upgrading ? (I know, I know, it's a "beta" version)
Indeed, a better solution than my patch would be to backport the PGP/MIME changes from 1.5. Rather than do that, I have simply started using 1.5, which is a reasonably nice client and has never done anything wrong/unstable.
since mutt-1.5.x is marked stable, this bug is no longer applicable