When you compile your own kernel, in order to enable support for dm-crypt, please make sure you check

Device Drivers --->
     [*] Multiple devices driver support (RAID and LVM) --->
        <*> Device mapper support
        <*> Crypt target support

ioctl: LOOP_CLR_FD: Device or resource busy

When we try to close a LUKS partition using "losetup -d /dev/loopX", we often get this error message "ioctl: LOOP_CLR_FD: Device or resource busy".

Here are a few things to try or check:

If you use Linux kernel 2.6.x, you can use dm-crypt to encrypt your filesystem. On RedHat, it's installed by default, unless you did the bare minimum installation. On Ubuntu and Gentoo, you get can them from the package management system, - just search for "cryptsetup" and then install the package.

Here are some documents on how to use cryptsetup: