I can confirm this bug still exists in Kubuntu 17.04 amd64.

In my case though what I am trying to achieve at the end of the day is
slightly different: to have a dm-crypt/LUKS / without LVM layer.

I recently installed Ubuntu server 16.04.2 LTS and there it's perfectly
doable.

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https://bugs.launchpad.net/bugs/1510731

Title:
  Can't use crypto in manual disk setup Kubuntu 15.10

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