If I understand correctly, you are not invoking python, but simply calling "penelope.py" that your Windows shell opens as a text file.
Assuming you added the python bin to your $PATH***, try cd to that directory and then:
Code:
python penelope.py -p English-German -f en -t de
as written in
http://www.albertopettarin.it/penelope.html. Note that you must set "de" as the "to" language, if your dictionary is indeed from English to German.
*** To test whether you added python to your $PATH, try opening the interactive console:
(you can exit writing "quit()" --- without quotes )