I have a similar problem that may be related.

I have an encrypted home directory as well. New ubuntu 9.10
installation. Ext4 Filesystem. When I tried to change my user password
from the "Users and Groups" window it would never complete. The window
would stay busy....upto 40 minutes the first time before I finally
closed the window. I logged out and back in again to try once more but I
had the same problem. So basically, it looks like I am unable to change
my password.

Let me know if I should open a new bug report.

Thanks,

Chris

-- 
9.10 karmic gdm login fails after changing password (users-admin) when home 
folder encrypted (ecryptfs)
https://bugs.launchpad.net/bugs/470129
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