This makes sense... the old FileVault is not very compatible with Lion, and there's no easy way I've found to upgrade -- if you have your Time Machine FileVaulted (old FV), when you upgrade to Lion, all pre-lion backups become inaccessible. Removing File Vault protection before the upgrade, and then installing new File Vault protection after the install appears to fix the FV-related issues.
From an analyst's viewpoint, I avoided the old FV due to the number of implementation issues I saw in it (I just used applescript automated encrypted disk images instead); however, the new FV gets my stamp of approval (proper key handling, recovery, use of hardware encryption, proper abstraction layer...).
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Andrew
Threat Researcher
SophosLabs
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