I have a remote rsync with gpg encryption and can restore without problems on my thinkpad (FreeBSD) - but not on my MacOSX:
$ git annex whereis DSC_7615.JPG whereis DSC_7615.JPG (2 copies) 6855de17-c8fb-11e1-9948-f0def1c18073 -- thinkpad e388bcf6-c8fc-11e1-a96f-6ffcbceb4af4 -- backup (rsync xxxx) ok
$ git annex get --from backup DSC_7615.JPG fatal: Could not switch to '../../../.git/annex/objects/Pw/XP/SHA256-s1028494--SHA256': No such file or directory
git-annex: : hGetLine: end of file failed git-annex: get: 1 failed
$ git annex version git-annex version: 3.20120629 local repository version: 3
.git/configlook the same?I recently encountered this problem on OSX, and I'm pretty sure I fixed it. But I don't remember the details of how. I'm sorry I don't have more detail, but I recommend trying a newer version of git-annex.
And if the problem persists, --debug will show the git commands and should help identify the one that's being passed bad parameters.