Time Machine + FileVault on Lion or Mountain
Time Machine on 10.7/10.8 uses the same encryption as any other non-system disk. When you first enable it, OS X has to encrypt the entire disk, which takes a while. The status "Encrypting" just means that it's still working on that.

You can check on the status with diskutil cs list in Terminal. Mixed in with other info, you'll see something like:

Size (Total):       124190560256 B (124.2 GB)
Size (Converted):   2539913216 B (2.5 GB)


That's 2.5 out of 124.2GB complete. Once the disk is fully encrypted, it's done for good and you'll basically never see that status again.