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Nobody at the QT software company has any
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At the what?
What makes you think there's any such thing as a QT software company?
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Why is the encryption suddenly screwing up / not being recognized?
Sounds like you have a damaged wallet.dat file. Hopefully you have a good backup from earlier? Otherwise, you can try using the pywallet tool to extract the private keys.
As a test, I loaded up this wallet with quite a bit of BTC in it ... and tried to send just .0001 BTC
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I got this message:
"This transaction is over the size limit. You can still send it for a fee of 0.0001 BTC, which goes to the nodes that process your transaction and helps to support the network. Do you want to pay the fee?"
Over the size limit?
I was trying to send 0.0001 BTC.
My paranoia is kicking in and telling me that the software thinks I want to send all my BTC somewhere. That's the only way it would be over any limit.
Bitcoin QT will require you to pay a fee of 0.0001 BTC on any transaction less than 0.01 BTC. The message about "over the size limit" can be a bit misleading, but isn't an indication that "the software thinks you want to send all my BTC somewhere".
Something is seriously wrong.
Define "seriously wrong". So far the only issue you've reported is:
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5) I chose to encrypt again, with the same passphrase, and it told me:
Wallet encryption failed due to an internal error. Your wallet was not encrypted.
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Which does sound like a damaged wallet.dat file, but isn't anything to panic about yet. Panic is likely to lead you to drastic measures that will result in making things worse.
Can someone please help?
I'm trying.
I can't afford to lose everything in this wallet.
Then you probably shouldn't be using the software until you have a better understanding of how it works and how to properly protect yourself from loss. Considering the significant volatility of bitcoin, you really should re-think your decision to use it for storing value that you "can't afford to lose".
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as we have all heard - shit hits the fan with a compromised wallet only when you try to "send", right?
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Where did you hear that?
Why would sending more BTC make the "transaction size in bytes" smaller ?
Generally, it wouldn't. However, you can potentially eliminate the need to include a transaction fee if ALL the outputs of your transaction are more than 0.01 BTC (assuming of course that you don't have other factors reducing the priority of your transaction).
I really ... really ... really hate trusting this much money to a software program like this. For this exact reason.
Then why are you?
Bitcoin QT is a crap software as far as I am concerned. This is totally unacceptable.
Perhaps you should improve it? Or hire someone to improve it for you if you don't have the skills? It is open source software after all.
By the way, why is this called the Bitcoin QT support forum when absolutely *nobody* from Bitcoin QT participates or helps anyone here?
Nobody from Bitcoin QT? What do you mean? Software developlers volunteer their own time to assist here. They have no obligation to assist on your personal schedule.
You really shouldn't trust money that you can't afford to lose to something that you understand so little about.
Its not a software support forum when a bunch of end users have to sit around making clueless guesses.
Actually, that's exactly what it is. Especially when the person having the issue provides so little information about their problem.
Here's a good start:
What operating system are you using?
What version of QT are you running?
What errors are you seeing in the logs?
Do you have any older (or more recent) backups of the same wallet.dat file that is damaged?
How many addresses are used in the damaged wallet.dat file?