I feel like I followed your reasoning but did not end up at your conclusion. Where do you draw the line to say passing over that line is creation? You seem to start out making the point that the decrypted drive is many steps away from child pornography, power needs to be supplied, the hard drive needs to spin, an operating system, CPU, motherboard etc needs to interact with the drive to read the bits and copy them to many different memory systems, an algorithm needs to be applied to them to decode their compression, the result of which needs to be fed to a display or printer and viewed by a person with functioning eyes...
But then you seem to be fine ignoring all that and calling the decrypted contents "child pornography". Why aren't the encrypted contents also child pornography? Why is decrypting them the point of creation, rather than, say, opening them in an image viewer?
I think you didn't follow my reasoning then. The point is that the creative act is everywhere, and we prefer to abstract it away in general. So it's not that "passing over some line" is creation, there are dozens of creation lines that we must follow to go from "this block of metal" to "contains an image of the murder." That block of metal contains spins which we interpret as 1s and 0s comprising a pattern which we'd recognize as a compressed JPEG file which, if you render it onto a screen and then look at it, and interpret this blob of color as being blood and that blob of color as being the victim, shows an image of the victim apparently recently deceased. All of those are essentially creative steps.
Now, I'm also trying to form a line of demarcation for why we feel we can abstract those away, and I think that at least an acceptable first approximation, a first abstraction layer, is something like "a normal person with normal tools can look at X and, through this, view a pornographic image."
If it's encrypted then the point is that this becomes one of Joel on Software's "leaky abstractions." The problem is that no, we can no longer ignore the massive number of creations, because you need to say a Magic Phrase to interpret this thing as an image. If you pronounce a different phrase, it just looks like random data. What we're telling the defendant is something like, "say the phrase that makes this look incriminating" -- or perhaps just "say the phrase that makes this not look random."
I guess to answer your last question: Neither the encrypted nor the decrypted contents are, in the absolute strictest sense, images. They have to be rendered onto a screen and then viewed by a conscious person of sound mind to be images. (Maybe a better word is "viewings.")
So decrypting them is a point of creation, as is opening them in an image viewer, as is looking at that image viewer. The absurd thing to me is, if you really focus on the technical details, you'd have to conclude that they don't become "child pornography" until we view them and say "that looks like it was intended to arouse someone, and it looks like it contains an underage person."
So part of why I'm proposing the above "normal people with normal tools" idea is to give some ground to say that the decrypted stuff "can be thought of as child pornography" -- because a normal person will come to that judgment when using the data in a normal way. So in that sense, the decrypted contents "are" child pornography.
You may wish to ignore me on that; I may be becoming too philosophical and solving problems that don't need solving. Perhaps the big problem that's sitting at the back of my mind is this: for any large random-looking block of bits you give me, there is in principle a stream of bits which can be XORed with it to convert it into a JPEG file. In practice there are some limits based on block sizes and ciphers, but in principle there exists some mathematical transform which converts any normal hard drive into this sort of thing.
So I'm interested in the philosophical problem of excluding all of the transforms which we don't want to admit.