SCCM cannot encrypt Windows 7 during OSD

I came across this problem which manifested itself differently in a few cases but the most common result is something like this: Windows 10 1511 (build 10586) includes a new bitlocker encryption, XTS-AES encryption algorithm, which cannot be read by earlier versions of Windows including Windows 7, 8/8.1 and 10 older than v1511. The fix