MediaKit reports block size error, usually caused by not being a multiple of 512.
Let’s just say that this has been my least favourite OS X error this week. It occurs in Disk Utility (and Time Machine) and buggers up your ability to encrypt relatively new external hard drives – and hasn’t been fixed in Lion yet! This is pretty scandalous.
The only fix people are reporting is to upgrade to Mountain Lion, specifically to version 10.8.2.
Fortunately, so far this bug has only affected newish portable HDDs connected to laptops, which are modern enough to be able to be upgraded to Mtn Lion.