My issue was:
FileVault failed to encrypt my internal SSD (boot drive).
>diskutil cs list:
Encryption Status: Locked
Conversion Status: Failed
Has Encrypted Extents: Yes
Fully Secure: No
Passphrase Required: Yes
What I did to resolve:
1. Searched and read everything I could about FileVault, CoreStorage and SSD.
2. Backed up my entire system using time machine.
3. Booted into recovery mode.
4. Unlocked the volume (my internal boot drive).
5. Reformatted the SSD with "Journaled, Encrypted" option.
6. Restored my entire drive from time machine backup.
Note: system automatically restarts when done restoring. Just restart back into recovery mode again. You may be prompted for your disk password. That's a good sign.
7. Booted into recovery mode.
8. Unlocked the volume to allow a reset of the ACLs.
9. Used resetpassword to "reset" the ACLs. I updated the login password for good measure, too.
10. Restarted normally and logged in as the reset user.
11. Enabled the user in FileVault so you're not prompted by the disk password at start up.
References:
http://support.apple.com/kb/HT1427 - OS X Time Machine basics
http://support.apple.com/kb/HT4718 - OS X Recovery basics
http://osxdaily.com/2012/02/03/how-to-boot-into-os-x-lions-recovery-hd-partition /
http://blog.fosketts.net/2011/08/05/undocumented-corestorage-commands/
http://derflounder.wordpress.com/2011/11/23/using-the-command-line-to-unlock-or- decrypt-your-filevault-2-encrypted-boot-drive/
http://smallbusiness.chron.com/format-ssd-macbook-35208.html
http://www.macobserver.com/tmo/article/how_to_resolve_user-level_permissions_iss ues_mac_os_x
Observations:
It took me three attempts at this process to get it right. Each attempt was over 8 hours in duration due to the fact my SSD is 1TB. I was afraid of losing my data. And a couple times the system hung or froze. I was forced to do a hard shutdown. But with persistence, a great deal of patience and trust in the technology. I finally got it all working and it seems there was no loss of data.
Don't use the computer during this process. Don't shut it down, etc. I know the documentation and the screens say it is OK. But I think that is what got me into this mess in the first place.