As I mentioned earlier, there appears to be an issue with the Disk Utility that comes bundled with the Mountain Lion recovery/installation system.
If you’re looking to do a completely clean Mountain Lion install, and already have an encrypted filesystem created by FileVault from OS X Lion – you may encounter the following problem when attempting to erase or delete it through Disk Utility. I have been able to reproduce this across two machines now (an early 2011 17″ MacBook Pro and a mid-2011 21″ iMac).
Once you’ve booted from the USB drive and fired up Disk Utility – if you delete the encrypted volume, you’ll find you’ll come across this message:
You won’t be able to do anything at all with the boot volume – you can’t create a new partition, you can’t install – you’re snookered.
But don’t panic! Just quit Disk Utility, go to the Utilities menu and fire up Terminal. Then issue the command:
diskutil cs list
which will give you a list of logical CoreStorage volumes (and a physical volume as well – but ignore that). Copy the long UUID string of the the logical volume. Now type:
diskutil cs delete UUID
where UUID is that long string of characters. You will see a text-based progress bar for a bit and finally confirmation that the volume has been deleted. The whole process looks like this:
You can then quit Terminal, fire up Disk Utility, partition to your heart’s content and then finally install a fresh clean Mountain Lion from scratch. Hoorah.