I still had problems with an amd64-alternate installer from 2011-08-15.
I don't have the installer logs, but it appeared that the installer
kernel did not support ecryptfs (not shown in /proc/filesystems) and
there was no ecryptfs.ko to be found. When user-setup tried to create
the ecryptfs home dir, it naturally failed.

I managed to work around this upon the second attempt by chdir'ing into
the target install's /lib/modules directory, and manually insmod'ing the
ecryptfs.ko before responding to the debconf question, whether I wanted
to encrypt my home directory. That seemed to work ok.

However, after rebooting into the new install, lightdm fails to
transition to the desktop after entering the password. If I switch to
another text mode vty and log in, it mounts my ecryptfs home dir fine,
and if I then switch back to lightdm and log in graphically, that also
succeeds. So it would appear that lightdm has problems mounting the
ecryptfs directory.

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https://bugs.launchpad.net/bugs/820460

Title:
  User not created with encrypted home partition: user-setup exit code
  32

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