FileVault not working in OS x?

I'm going to take a wild guess here and say that you need more space on your HD.

 

First thought is don't use filevault. The problems it has caused people on this forum

Second: You need enough free space so it can create a disk image that is capable of holding al the contents of your home folder. To do this it needs enough free space. So If you don't have enough free space it can't do the intial copying.

The error message is pretty self explanatory.

 

File Vault is trouble. Unless you have seriously delicate information on there AND have a huge risk of the computer being physically taken, don't use it.