This bug was fixed in the package user-setup - 1.63ubuntu4.1

---------------
user-setup (1.63ubuntu4.1) xenial; urgency=medium

  * Mount /proc before calling adduser --encrypt-home. This calls into
    ecryptfs, which requires a /proc in order to find out where sysfs is
    mounted. (LP: #1817689)

 -- Iain Lane <[email protected]>  Tue, 26 Feb 2019 18:43:44
+0000

** Changed in: user-setup (Ubuntu Xenial)
       Status: Fix Committed => Fix Released

** Changed in: ubiquity (Ubuntu Xenial)
       Status: Fix Committed => Fix Released

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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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