Comment # 1 on bug 1000946 from Wolfgang Bauer

(In reply to Freek de Kruijf from comment #0)
> So apparently there are two standard
> locations for storing locally defined .desktop files.

Not really.
*All* locally defined .desktop files are stored in
~/.local/share/applications/.

But kgpg is a KDE4 application, and installs its system-wide .desktop file to
/usr/share/applications/kde4/ in the first place.
So the modified copy has to go to ~/.local/share/applications/kde4/ to override
it.

So far there's no bug.

But probably ~/.local/share/applications/kde4/ isn't created if it doesn't
exist, and then creating the file fails.
IOW, a similiar bug as https://bugs.kde.org/show_bug.cgi?id=356237 (though not
exactly the same) in a different place.

I'll have a look.