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After all this struggle and hassle, I finally figured out a way to take care of this annoying problem. Apparently, the new version of Lollipop was trying to use the user storage from the older KitKat version and was asking for a password after failing to access it. So the only solution is to wipe the user data from your Android storage.
Wipe the user data or Factory reset the Phone, you will have to reboot into recovery and then perform the factory reset. Here is how:
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