Indeed - the problem is there is no real need (and it could be a security risk) if a drive is continually noted as being encrypted. And, of course, you cant decrypt a drive before asking if the user wants to keep it during the update process.
You should also do USB and DVD backups if possible too
Perhaps it would be worth just keeping Windows on the encrypted drive and stick
everything else onto another unencrypted drive - that way, if there is a hard drive failure, the only loss would be Windows (which aside from the time taken to reinstall the thing, wouldn't really be a problem)