Why is PGP 5.x not able to encrypt messages with some keys?
PGP, Inc. refuses to accept ElGamal keys of type 20 even for encryption. They only support type 16 (which is identical at least for decryption). To be more inter-operable, GnuPG (starting with version 0.3.3) now also uses type 16 for the ElGamal subkey which is created if the default key algorithm is chosen. You may add a type 16 ElGamal key to your public key, which is easy as your key signatures are still valid.