I can see 3 possible scenarios:
1) Gov gave him "An Offer He Can't Refuse".
2) It's not him. He is either dead or in prison.
3) He is an asshole or mentally unstable.
Without commercial intentions he gives something for free, yet he forbids others from using it however they want. He also gave a completely vague reply to all the requests and arguments.
The author didn't owe anyone a filesystem encryption program. He still gave one to people for his own reasons. The fact that some people are pissed about the thing he gave them for free says more about those people than it does about him.
He doesn't owe anyone anything.
EDIT Fox must have good lawyers because I couldn't find Comic Book Guy complaining about how Itchy & Scratchy owe him because they've given him hundreds of hours of entertainment for free.
Jeez... nobody says he owes anything to anyone. Nobody said that people are pissed (maybe you are?) I think people are just disappointed because he destroyed something really valuable and he clearly hampers any attempts to recover that damage.
"I don't feel that forking truecrypt would be a good idea,[...]. I believe that starting from scratch wouldn't require much more work than actually learning and understanding all of truecrypts current codebase."
And you consider this a proper answer? Have you actually read the whole email? My personal opinion remains the same, but maybe let's just agree to disagree?
It seems like a pretty good answer to me. If he feels that the code is bad enough that newcomers are unlikely to efficiently be able to work with it and not make it unsafe by making mistakes, he's probably correct.
I understand your point, but in that case why not to make that information public? All they had to do was to say on the website "We gonna rewrite TrueCrypt, stay tuned". Instead, we have this: "WARNING: Using TrueCrypt is not secure" or "use BitLocker" (really?) They chose to completely destroy the reputation of TrueCrypt. They are spreading FUD. They don't want a fork. I just find it really hard to believe that a 'normal' person with good intentions would do such a thing...
Last but not least, the audit that took place some time ago went fine so there are no reasons to consider TrueCrypt less secure then anything else (in fact, it's quite the opposite) and no 'rewrite' is necessary.
He didn't forbid anyone from using it however they want, you just can't do whatever you want and call it TrueCrypt, or distribute whatever you do with it without saying it's TrueCrypt-derived. I've never understand why the "Free and Open" software community is so opposed to attribution clauses, it seems only fair to give credit.
Srsly: TC always had a weird license and we accepted it because the rest of the product (seemed to) work so well. He doesn't owe anyone anything.