SD! hangs when mounting destination (encrypted image)
 

I have been using encrypted disk images as a back-up destination with SD! on Panther and Tiger for quite some time.

I have just attempted my first similar back-up under Snow Leopard.
SD! appears to hang at the point that the destination image should be mounted.

In my past experience, there will be a prompt to enter the password for the image as it is being mounted by SD! (since it is not stored in the keychain).

No such prompt is occurring here.

(Adding the password to the keychain allows SD! to proceed, however I would prefer not to use the keychain and would rather be promoted to enter the PW manually as had been the case)

Sorry, that prompt isn't displayed by the system under Snow Leopard. To work around that, you can point to the mounted encrypted volume, rather than to the image file. The mount will then happen in Finder, and you should get prompted.

Okay, I'll mount the image before running SD!
Do you think this is a feature or a bug?
Should it be reported to Apple?

It's because you didn't add the password to the keychain, which is what I recommend people do.

Right, but on 10.3, 10.4 there would be a prompt for the password if it wasn't in the keychain. Now we just hang... So either SD! or Apple has changed something.

We didn't change anything: we've always used 'hdiutil' to mount the image.