I can confirm, having similar problem. I am using Debian Sid &
2.6.0-test9, with 4Gig highmem support (1.5G physical RAM). When reading
from cryptoloop (dd if=/dev/loop0 of=testoutput), it seems to produce
only noise. Each run of dd produces completely different heap of
garbage. When I disable highmem, getting rid of about 512 Megs,
cryptoloop seems to work as expected - I can do losetup & mke2fs & mount
& read/write files & unmount & losetup -d & again.. ad nauseam.
Regards,
--
Jindrich Makovicka