Answer
This has been linked to a corrupted nbproject folder inside the project's own directory. As a recovery technique: move or back up the nbproject folder out of the project directory (in case anything in it is needed later), then recreate the project by starting a new customization project and choosing the project folder type as 'Existing' to reuse your existing checkout rather than starting completely fresh, then close and reopen Developer Studio. This project-corruption recovery pattern (isolate/remove nbproject, recreate against the existing checkout) is worth trying for other Developer Studio project-loading errors that resist a plain restart or reinstall, not just this specific password-decryption exception.