you can't encrypt the sdcard at the moment, because ics doesn't support that.
for the new encryption feature in ics it encrypts your /data partion with dmcrypt-luks essiv:cbc:128 this is the same encryption which is used in all minor linu...
First make shure you Super CID your phone: http://forum.xda-developers.com/showthread.php?t=1192300 Step 4.
Then you need to flash the firmware directly from HBoot not in CWM oder something like this. look at http://forum.xda-developers.com/sho...