I’ve encrypted the file and sent it but the recipient cannot open it. It asks what App they want to open it in, but it will not recognise the file extension. Does the recipient have to download Axcrypt as I thought if I gave them the passkey they could open it without needing to download the software?
Yes, the recipient must download and install AxCrypt.
No, you should not given the recipient the password. You should use the key sharing feature (and ensure you’re using AxCrypt 2, not version 1 which is obsolete). We have videos showing this on our home page, https://www.axcrypt.net/ .