No external disk encryption available when booted from Lion installer

Problem: When booting my Mac Mini from a Lion Installer USB thumb drive, Neither Disk Utility nor diskutil from the command line seems able to actually encrypt an external drive. They both seem to be able to convert the drives to coreStorage, just not actually encrypt the drives.
Background: I was able to successfully preform 3 encryptions from the Lion system on my 17inch MacBook Pro before failing as described above:
1) I encrypted my main HD in my laptop (using System Preferences > Security & Privacy)
2) I encrypted my Time Machine backup (Using Time Machine system prefs)
3) I converted an external 2TB USB drive filled with data (I had a freshly mirrored copy of all this data as backup) using diskutil cs convert -passphrase from the command line
each of the successful encryptions took about 24hours/Terabyte
Here is where I tried and failed, step by step:
### Failure 1
I created a bootable backup of Mac OS X Lion on a USB thumb drive. I booted my Mac Mini with it and attached a 2TB external USB drive that I wanted to encrypt. It was a blank drive so I launched Disk Utility from the recovery/installer screen and created 1 partion, GUID, Mac OS Extended (Journaled)
Then I went to the Erase tab and chose Mac OS Extended (Journaled, Encrypted), provided a passphrase and erased. It took just a couple seconds and said it was done.
I moved the 2TB external to my laptop running Lion, it asked for the passphrase and when provided the drive mounted just fine but when examined with "diskutil coreStorage list" I see a couple problems (besides the fact I don't believe it encrypted a 2TB drive in 15 seconds)
Conversion Status is NoConversion and it's not listed as revertible - my successful encryptions are listed as "Conversion Status: Complete and Revertible: Yes (unlock and decryption required)"
    +-> Logical Volume Family 83A8BED0-EA17-433B-B494-B71D9B16142C
        Sequence:               2
        Encryption Status:      Unlocked
        Encryption Type:        AES-XTS
        Encryption Context:     Present
       Conversion Status:      NoConversion
        Has Encrypted Extents: Yes
        Conversion Direction:   -none-
        |
        +-> Logical Volume FD9868AA-C880-475A-8AFE-98DFCED1A0B4
            Disk:               disk8
            Status:             Online
            Sequence:           2
            Size (Total):       1999903956992 B (2.0 TB)
            Size (Converted):   -none-
            Revertible:         No
            LV Name:            2011-07-24
            Volume Name:        2011-07-24
            Content Hint:       Apple_HFS
### Failure 2
Still booted from thumb drive installer, I attached a 1TB Firewire drive with files on it (it is a mirrored copy of an original drive) and l launched Terminal and attempted to use "diskutil cs convert /Volumes/mydrivec -passphrase" to encrypt the drive without erasing it first. Again it seemed to work, it went thru the corestorage step and when mounted on my laptop running Lion I'm asked for the passphrase and it mounts and the files are all fine but again it finished in seconds instead of the 24 hours I was expecting, and diskutil cs list shows a conversion status of "converting" but no progress is being shown in Size (Converted) or Conversion Direction and Revertible says no decryption required
> Logical Volume Family A54F382A-54A0-4295-B3A8-1CA0E92341C4
|       ----------------------------------------------------------
|       Sequence:               4
|       Encryption Status:      Unlocked
|       Encryption Type:        AES-XTS
|       Encryption Context:     Present
|       Conversion Status:      Converting
|       Has Encrypted Extents: Yes
|       Conversion Direction:   -none-
|       |
|       +-> Logical Volume C6AFB536-3C5F-48D0-A590-BD6883A4D763
|           ---------------------------------------------------
|           Disk:               disk7
|           Status:             Online
|           Sequence:           4
|           Size (Total):       999542140928 B (999.5 GB)
|           Size (Converted):   -none-
|           Revertible:         Yes (no decryption required)
Thoughts on why I'm not getting actual encryption when booted from Lion installer thumb drive? I don't want to upgrade the Mini to Lion (yet), I just want to boot it up from Lion installer and use it as an encryption station for a week.

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>>>
From: dwall72<[email protected]>
To:novell.support.zenworks.endpoint-security-management
Date: 11/11/2009 6:16 PM
Subject: Does Endpoint Security Disk Encryption have pre-boot auth?
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