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I don't think you need to worry about the "can't connect to `/u/sf/cottrell/.gnupg/S.gpg-agent': No such file or directory" it is probably out of sync STDERR outout from when it found out you needed to sign the key.
The --sign-key option is a short cut for --edit-key found in http://www.gnupg.org/gph/en/manual.html.
Reading an encrypted message from somebody
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The decrypted output is written to STDOUT, here redirected to junk.
The WARNING (if it appears) means you have not signed the key yet (see above for how to sign).
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