Okay, the issue with failing X server in my case was not relevant to the 
encryption errors and was resolved by completing the upgrade process properly:
sudo apt-get update && sudo apt-get dist-upgrade
So this one was more related to the broken upgrade process for 17.04-17.10, so 
please disregard this part.

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https://bugs.launchpad.net/bugs/1718658

Title:
  ecryptfs-mount-private fails to initialize ecryptfs keys

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