If you don't have a fresh install of the OTA, then it'll cause your handset to slow to a crawl. It's unfortunate, because most people have no idea how to do a fresh install, and they're dealing with a terrible device now.

 

You'll need to follow these instructions for a fresh installation. All your data will be wiped, so make a backup with Titanium Backup Pro if you haven't yet.

 

IMO, you should do a factory reset before SBF'ing.

• Hold 'X' while powering on the phone
• Press both volume rockers at the 'triangle'
• Use left and right arrow to go up and down (I know, ridiculous.)
• Select 'Restore factory default'

You will lose everything that is not stored on your SD card.

 

I had the same problem. I tried everything from taking out the battery to a hard reset. I eventually gave up and got a Droid Bionic.

 

I wonder if problems like this are why the update has been delayed so long? It really shouldn't take weeks to deal with the encrypted data issue, but if the issue is something more like this, I could see that taking weeks.