The most common reason for decryption problems after a Windows restore or re-installation is that the file is (sometimes also) encrypted with Windows Encrypting File System, EFS. This is typically indicated by the file name being shown with green text in Windows Explorer, and the error message ‘Access Denied’.
In your case, you say you get “wrong file extension”, but say it is “.axx”. This can be caused for example by manual renaming of a file, while at the same time having file extensions hidden in Windows. The actual name might then be “My File.axx.txt” – but Windows only shows “My File.axx”.
Please send a screen shot of both the file in question in Windows Explorer, as well as the AxCrypt windows including the error message you get.