FP2 encryption doesn't start without camera modules or with torch turned on

[AnotherElk]

@bg4

Does this mean the phone is not encrypted, or is there another problem occurring here?

Your phone is encrypted.
Whether TWRP can decrypt this encryption depends on the OS and the TWRP version.

TWRP 3.3.0-0 and 3.3.1-0 on the Fairphone 2 can not decrypt anything.

TWRP 3.2.3-0 reliably decrypts encryption up to Android 7 (current Fairphone OSes, LineageOS 14.1), but can not decrypt Android 8/9 encryption (LineageOS 15.1/16.0).

There’s a custom TWRP 3.2.3 build here, which attempts to decrypt Android 8/9 encryption, but as of now it doesn’t manage to do it reliably.