I intentionally caused this scenario by booting ML via USB through InstallESD.dmg, using Disk Utility to erase and format as journaled/encrypted prior to install.
Perhaps that's what some of you did as well?
The reason I chose to do this, is because I don't want my disk encryption password to be the same as the admin password I'm constantly typing in, and that one single annoyance ended up being the only reason I clung on to Symantec PGP for as long as I did.
So I have a disk encryption password independent of the user accounts as a result.
Once I figured out this workaround, I kicked Symantec to the curb and hope this never gets "fixed" so I don't "have to" go crawling back to that horrible product.
A grey user icon and a message that says "update needed" is a small price to pay for NOT being wary of applying any kind of system update for fear I'd get locked out of my computer on the road without a PGP recovery disk handy.. again.. again.. again.
Mentioning this because I know someone's going to hit it in a web search eventually - and also because its a replicable way to cause this behavior.
This might be a less obvious root cause if you chose to encrypt your disk prior to install and then created a user account during install using the same password.