What I've been able to piece together from the fragments of this case that have been reported by non-technical journalists is that he used some sort of P2P software like BitTorrent to download the files. This P2P software kept the checksums of every downloaded file on his unencrypted drive (basically it stored the torrent files somewhere). The FBI compared the checksums in those file to ones of known CP images and found some number of matches (how many has not been reported from what I've seen).
So it really looks like they've got plenty to convict this guy on the evidence they have, but are refusing to bring the case to trial until he unlocks his external hard drive for some reason.
It's one of two ways. It's either the hash algorithm hashes are strong enough to prevent manufactured hash collisions (not just accidental ones) and the gov could convict on the hashes alone, meaning the files aren't needed and the All Writs Act is not appropriate, so he's not in contempt. OR the hashes wouldn't stand the trial by themselves, and leaves a much weaker argument for the need to decrypt because you're less certain that it would contain the files you think it does.
I think the specifics in this case, Like the sister's testimony, go against the second possibly weakening their argument.
So it really looks like they've got plenty to convict this guy on the evidence they have, but are refusing to bring the case to trial until he unlocks his external hard drive for some reason.