I found similar bugs related to GDM and encrypted home directory.

Unfortunately it might not be a bug after all.  Correct me if I'm
wrong...

Apparently for security reasons, it's mandatory to prompt for the user
password to decrypt the home directory.  Otherwise, that would render
the purpose of encrypted home directory totally useless.

So this probably is more of a wishlist entry than a bug:
1. Make clear on installation that using an encrypted home directory will 
prevent the use of the auto-login feature
2. Disable the auto-login option under 
system-settings>login-manager>convenience when obviously it won't work

Right now, it's certainly a great source of confusion to new users.

-- 
auto-login won't work
https://bugs.launchpad.net/bugs/368061
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