Observations so far: the issue can only be seen during ubiquity install
in user-setup. If you run something like `adduser --encrypt-home user`
on the installed system or on the live system, everything just works.

Apparently adduser fails on ecryptfs with "user-setup: Error: Your
kernel does not support filename encryption". This string comes from
ecryptfs_add_passphrase.c in ecryptfs-tools and is only printed if
there's a problem in reading /sys/fs/ecryptfs/version or if the version
doesn't support filename encryption (it's a binary flag on the version
number). Checking /sys/fs/ecryptfs/version at any time of the
installation process (either in the live part or in /target), the
version seems to support what's needed.

Could it be that for some reason user-setup runs before sysfs is mounted
in /target/sys/ ? And therefore unable to perform the setup since the
version path does not exist? Or maybe some permission error? Why does
that only happen now and not on .5?

** Changed in: ubiquity (Ubuntu Xenial)
    Milestone: None => ubuntu-16.04.6

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https://bugs.launchpad.net/bugs/1817689

Title:
  [16.04.6 Desktop] Cannot log in after installation with encrypted home
  enabled

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