I solved this issue!
The problem is, when OS X or iOS sends a signed email there seems to be no indicator included which tells the receiving mail program what type of encryption method to use. This doesn't matter if the receiving mail program is OS X Mail or iOS Mail. But MS Outlook and Windows Live Mail, for that reason, fall back to a 40-bit RC2 encryption method. The 40-bit RC2 encryption method is an old standard that can still be decrypted by OS X but not by iOS. See herean herefor details.
To overcome this problem Windows Live Mail needs to be told to send emails in 3DES. To achieve that I did the following.
1. I added my Mac email account to Windows Live Mail
2. I imported my Mac email S/MIME (.p12 file) into the Windows Certificate Manager
(one copy needs to be in "Personal" and another copy in "Trusted Root Certification Authorities")
3. I added the S/MIME as signing and encrypting keys under Security in the Mail Account Properties. And set Algorithm to: 3DES
4. I sent a signed email in Windows Live Mail from my Mac email account to my Outlook email account.
This adds the S/MIME certificate in the Certificate Manager to "Other People"
5. Copy the certificate in the Certificate Manager to "Trusted People" and "Intermediate Certification Authorities" if it is not already there.
6. Delete the S/MIME in "Personal" and in "Trusted Root Certification Authorities". This will delete the private key.
7. Delete the Mac email account in Windows Live Mail.
When you are done with these 7 steps Windows Live Mail will only have the Mac S/MIME certificate/public key and knows that
it is supposed to send emails encrypted in 3DES.
And voila, decrypting emails in iOS send from Windows Live Mail is working!