After repeating loop-aes setup I'm sure, that it should work, but it doesn't. I'll give you all configurations:
I'm using gentoo with suspend2-sources kernel v. 2.6.20, compiled loop-AES v3.2a, dietlibc
0.30, util-linux 2.12r. When booting from USB flashdrive, kernel boots ok until this:
RAMDISK: Compressed image found at block 0 Replacing swsusp. No storage allocator is currently active. Rechecking weather we can use one.
Compression Driver: Argh! Nothing follows me in the pipeline! Compressor didn't initialise okay. Suspend2: Initialise modules failed! VFS: Mounted root (minix filesystem) readonly. Mounting /dev/sdc as /lib failed
md: stopping all md devices. . . System halted. . . (follow some suspend2 related messages) Note that equal output comes if there is no encrypted root (I switch my sata drives sata1,sata2 <-> sda, sdb).
No password is asked.
--configurations--
syslinux.cfg: default linux timeout 0 prompt 0 label linux kernel vmlinuz append initrd=initrd.gz root=100 init=/linuxrc rootfstype=minix