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You need to repair via sony update service or reset to factory settings.
http://www.sonymobile.com/gb/tools/update-service/
As Alex says - You can't Decrypt once you have Encrypted your phone - The only way to fix this is to perform a repair
If you encrypt you can not backup the phone's data. And if you want to turn off encrypt feature, you have to reset so you have to lose all your data to turn off the encrypt feature since you can not backup once encrypt is turned on.
Maybe, just maybe, this is SOMETHING THEY WANT TO TELL US BEFORE WE CHOOSE TO ENCRYPT?!?
Just to make things even more frustrating, not only is backup disabled, but it's not possible to unlock the Micro SD card either. You can not enter your device password to access the card with a card reader. So you lose all data on the card once you turn off encrypt. Even non-Android data.