Why are some users visible with encrypted system partition on macOS Sierra?
Not sure what the "please fix the library" message means but all of your data is encrypted on the boot partition. You can use a disk password, recovery key or allowed user passwords to unlock a FileVault disk.

When you do it the "normal way" as you mentioned above you won't end up with a disk password. No big deal.

It sounds like User 1 isn't allowed to unlock the disk in this case. You can use the fdesetup command for things like this. For example, to see which users are allowed to unlock the disk:

$ sudo fdesetup list
Password:
macmanager, 51361A22-B6F2-4384-8E0D-F4973BE74957


While logged in as any user you can look in System Preferences > Security &amp; Privacy > FileVault and if some users aren't allowed to unlock the disk there will be a warning with a button to enable users.

You can also use fdesetup to add users to the list, assuming you know their password:

$ sudo fdesetup add -usertoadd davem
Enter a password for '/', or the recovery key:
Enter the password for the added user 'davem':