I can't promise that this is the problem, but you don't check the results of sysread and syswrite. What happens if you get a short read and don't have a full block? The finish() method pads for that, but you can't use it in the midst of things.

It would be easier to use buffered I/O with local $/ = \1024;. Your loops would then look like:

{
    local ($/, $_) = \1024;
    while (<ENCRYPTED>)) {
        print DECRYPTED $cipher->crypt($_));
    }
    $cipher->finish();  # amend to what kiaf says!
}
[download]