Ok, I am able to reproduce it with Virtualbox.

The steps are as follows:
1. Create a VM with 28GB of dynamic storage (you won't use it all up, but the 
partitioning scheme requires that).
2. Use a mini.iso from 
http://archive.ubuntu.com/ubuntu/dists/raring/main/installer-i386/20101020ubuntu231/images/netboot/
3. Boot the ISO with url to the preseed file (attached).
4. As part of the installation, a prompt for HDD password will appear.
5. Upon reboot you will get a box without an explanation what it's for.

The seed file is nothing fancy, just the regular LVM on LUKS.

** Attachment added: "A preseed file with LUKS crypt partitioning"
   
https://bugs.launchpad.net/ubuntu/+source/plymouth/+bug/1187318/+attachment/3707195/+files/hdd-part.seed

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https://bugs.launchpad.net/bugs/1187318

Title:
  Splash skips text when asking for LUKS password

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