I'm not sure if we are having the same issue here, but you may want to
look into Bug #484429 which describes similar behavior as well as a
workaround.

==

Steps to reproduce 484429:
1) Go into palimsest (disk utility) and create an encrypted partition on an 
external disk.
2) Quit Palimsest
3) Pull the USB stick
4) Intert the USB stick

Result:
GNOME displays a dialog for the password. Once submitted, the following error 
comes up:
Error unlocking device: cryptsetup exited with exit code 239: Command failed: 
Device already exists

-- 
LUKS automount fails with jaunty
https://bugs.launchpad.net/bugs/363426
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