User named [Update Needed] after installing yosemite with encrypted drive

  • Log in into the Mac as administrator.
  • Backup the Mac with Time Machine (optional but recommended)
  • Launch System Preferences selecting System Preferences from the Apple menu.
  • Click the Security & Privacy preference pane.
  • Click the FileVault tab.
  • Unlock the pane clicking on the padlock (administrator password required)
  • Disable FileVault and wait (…about 3hrs with a 250GB no SSD HD)
  • Restart the Mac (optional but recommended)
  • Go back the FileVault tab.
  • Enable FileVault and wait (…about 7hrs for me!!!)
  • Restart the Mac.
    The unknown user account will disappear.
    This should also now allow you to set automatic login.

Sources: FileVault and update needed at the login screen: How to solve
Fresh install of Yosemite adds [Update Needed] user
Login screen shows "update needed" but no updates are available