I tried the re-installation of the latest version of the software. But made no difference. An ex- Microsoft friend suggested I install a Shell-Extension-Manager utility from the website http://www.nirsoft.net (full of useful utilities but needs careful use), and found out that the Axcrypt Shell Extensions were not enabled. I enabled them and the problem was solved. To this day I don’t know why the extensions were not enabled during installation of Axcrypt.
Great! I was probably going to suggest the nirsoft software as the next step – it’s very useful to understand why shell extensions are not working as expected. I have no idea either why they would be disabled, especially after a re-install.