From: DeskNow Knowledge Base
http://www.desknow.com/kb/

I cannot send encrypted emails. The InternalError log says: exception unwrapping private key - java.security.InvalidKeyException: Illegal key size
http://www.desknow.com/kb/idx/11/159/article/

This error means that you need to install - as recommended in the installation instructions - the encryption policy files that enable Java to use export-controlled encryption algorhitms. This error normally does not occur if you installed DeskNow on Windows using DeskNow.exe, as it already includes these files.

See http://www.desknow.com/kb/idx/0/152/article/ for installation instructions.