Startup gets stuck at "no" icon after enabling filevault

I have a clean install of 10.7 on a 2010 MBP (reinitialized HD, installed snow leopard, installed Lion).
After enabling File Vault, it asked me to retart my Mac.  I did that, logged into the account I provided file vault access to, and now have been stuck for hours at a screen that just shows the "no" icon (circle with a diagonal line through it) with the spinning progress wheel underneath it.
I let it do this overnight and then restarted the Mac this morning, logged in again, and I'm back at the same screen.
I have a full backup and can restore from that if necessary, but my bigger issue is how can I get filevault to successfully work on my Mac.
Any suggestions greatly appreciated.

Update based on some additional troubleshooting:
I've now been able to recreate this three times by following this sequence (I've started to restart more frequently to pinpoint where things go wrong)
Reformat Mac partition (leaving Boot Camp alone)
Install OSX 10.6.3 using the install disc that came with my computer
Run software update until all updates applied (requiring a few restarts)
Install Lion
Restore applications and my local user directory using Migration Assistant and my Time Machine backup
So far so good.
6. Restore "other settings" (I believe it's called that) in Migration Assistant.
This is when the issue first appears.  Not sure what setting would cause this issue, but whatever it is, it effectively makes my Mac HD unreadable.

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