Had the same problem installing in a VM. A "swapon -s" shows that there
are two swap spaces created by zram (part of the RAM gets compressed and
and used like swap space but with higher priority than "real" swap
space).

For the installer it really seems that there is swap space enabled in
the system so it does what it should in this case: Warn about that and
cancel the installation. So no bug in my eyes.

With that information it's really easy to perform the installation
anyway: Open a terminal and type "sudo /etc/init.d/zram-config stop".
After that there are no swap spaces provided by zram anymore and the
installer does it's job without complaining/aborting.

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https://bugs.launchpad.net/bugs/1241833

Title:
  Lubuntu 13.10 installation with full disk encryption fails

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