filevaultmacos
It seems that after disabling Filevault 1 in OS X Lion, there no longer is an option to choose between Filevault 1 and Filevault 2 functionality.
I actually prefer Filevault 1 over Filevault 2, since it does not interfere with my theft protection software and allows me to use a guest account.
Is there a way to enable Filevault 1 again?
If you hover over the disabled option, a tooltip appears explaining that the guest account can't be activated with FileVault turned on:
This is because the new FileVault uses full-disk encryption that's decrypted by the login password of one of the users. As the guest account, by its nature, does not have a password, that would leave your computer completely unprotected. You can still create an account for guest purposes as a regular account though.
it has been noted that this hover tip may take some time to display and can be difficult to trigger for some people, but regardless of whether or not you can see the tooltip the answer to the question is the same
How to disable that “Guest User” from appearing at the OS X 10.7.2 login screen
This prevents the Guest User account from being visible at the login screen both during reboot and at the login screen. Again, it’s highly recommended to keep this enabled for security purposes, but if your Mac is locked down with a security cable or you don’t have any use for Find My Mac, you could disable this and not feel too bad about it.
If you haven’t tried it yet, clicking on the Guest User account gives you this message:
This computer will restart to a secure, Safari-only system for the Guest user.
The reboot process is quick and opens directly to Safari, there is no access to anything else. No Finder, no preferences, nothing.
Source: osxdaily
Best Answer
Even if the creation tools are gone or hidden very well from us, you point out Lion is happy to keep running a user that has been migrated in so you can take advantage of that to get what you had back again.
Lion makes it several steps with some minor "complications" - but you should be able to Migrate another user shell in and move your current data into that older style account.
I keep an external USB drive with 15G partitions around with the last OS but no real user data. You could install Snow Leopard onto an external disk or partition and make shell user with FileVault 1 enabled or you could use any backup from your Snow Leopard time to move in another copy of your user with FV1 - and simply move the current contents into the old encrypted sparse bundle storage.
Let's start a new question if you want advice HOW to actually do this (since it will depend on your specifics) - this question stands well just with the simple fact that the built in tool to do this isn't available on Lion.