Nevermind.. It's encrypting now. I reassigned users and it started. Looks like that was the issue.
In the interest of helping others. I just ran into this again. Macbook Pro 8,1. I did everything.. It kicked off after the policy update. I'm not sure how to force the policy update but the box wouldnt start encrypting until that happened. That was 1 full hour. So if you run into this, either wait an hour, or figure out how to enforce a policy update on the Mac. Maybe someone can post it.