Initially I had the same issue.
But when I read the instructions very closely all the fields are base64 encoded. The PGP Public Key is normally PEM encoded, which is a base64 encoding scheme, so I had assumed that was applicable. But the PEM encoded public key then also needs to be base64 encoded as well.
I've uploaded sample policy for encrypting using a generated public key.
Here is the policy, note the Base64 encode of the PGP Public key.
Here is the PGP Public key, in its normal PEM (Privacy Enhanced Mail) format :
And the settings for the PGP Public Key encryption :
(note the input is the base64 encoded version of the public key.)