Same issue here. MacPro 2019 (T2), Tahoe upgrade from a stable Mac OS X 15, @first reboot -> lockout (password and latest recovery key no go).
Did manage to run a diskutil info in recovery mode to find out that:
Sealed: Broken - The Signed System Volume (SSV) integrity seal was invalid
Encryption Progress: 16.0% (Paused) (Locked) - A FileVault encryption operation was started, the operation reached 16%, was paused, Data partition volume was locked...
Encrypted: No: volume is not fully encrypted, But not fully unencrypted which reflects an in-between APFS state...
Encryption intent exists... But encryption is incomplete and paused
Assumption on why this happens on Mac Pro 2019 (T2)
T2 manages (1) Pre-boot authentication, (2) Disk encryption keys
During upgrades, macOS modifies APFS snapshots and FileVault keys are rewrapped
Any interruption (which happened because OS enabled me to reboot smack in the middle of the re-encryption process) → partial encryption + broken seal
Hoping an Apple engineer stumbles on the above and either confirm this or not... because, until this thing gets fixed, I can no longer rely on Time Machine backups on Tahoe on my MacPro 20219 T2...
I called Apple, shared the above info verbally, and offered to share diagnostic data (ticket 102***078 if anyone in the IS engineer team is interested on picking it up :) ) - but on December 31, I got to a very nice support agent that wasn't able to put me thru higher OS engineer teams...
So now... as I re-read the above, I'm thinking that I should revert back to Mac OS 15 - rebuild my MacPro 2019 T2, and restart my Time Machine backups that I know I'll be able to use in the future if my Mac crashes again.... (because I did have valid MacOSX 15 Time Machine snapshots, but I cannot access them as TM did a few backup cycle on the new install Mac OS Tahoe... before I was locked out... new OSX 26 TM snapshots prevented me to access Mac OS X 15 valid snapshot from a Mac OS X 15 installation... maybe something to re-think guys as well.... I can no longer access Max OS X 15 TM snapshots because I installed Tahoe... but Tahoe is my issue and now I can't access OS X 15 TM snapshots... infinite loop of something very bad if you ask me...)
Tx all and Happy New Year!!!! :)
[Edited by Moderator]