Off the top of my head, it looks like you're trying to run a remote PGP command. (based on you using \\servername\path\pgp.exe) In my experience, you likely need this installed and configured locally in order to get this to work. I can't speak to that specific error, but when we were using GnuPG (gpg.exe), we added it to the path and made sure that it could always find the keystore for the public/private keys that were needed. If you try to run the command on that machine, what happens? What happens when you run it as the service account?
I'm not sure how the official PGP software stores its keys, but that could play into the issues as well if those keys are stored per user as opposed to just on the server.