are you by any chance using your "Master" public key? it starts with xpub?
you can only sign with your (individual) key which will start with 02 or 04 for compressed and uncompressed pubkeys respectively.
Ahhh! That was it! Now I can encrypt messages.
I did not know there was a master public key vs individual public key.
Here is how to find an individual public key in the Electrum wallet:
1. Click View -> Show addresses
2. Open the addresses tab
3. Find your receiving address in the list (or pick any other address you want to use) and right-click it -> Select Details
4. Your public key is shown in the middle box
My individual public key started with a 03, which I researched and it is also a 32-bit compressed public key.
Thank you for your help!