Seems you have broken NAND-memory (4GB chip) which contains all system, data, etc.
Now 8 (!) people on forum experiencing this: you and this 7 1, 2, 3, 4, 5, 6, 7
Info about Encryption unsuccessful
Phone tries read partitions and due some reason data there messed up.
It's looks like encrypted data for phone and he trying deal with it.
Googling says that this is consequence of broken NAND-memory.
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