If you really want to try and follow the Live CD+decryption+chroot route, then by all means feel free, but chrooting into encrypted partitions can be really finnicky, and that is the cause of all those weird errors (the chrooting itself, which is hardly ideal, and the encryption).
There is a far easier way to escape from all this pandemonium. But first, is your wifi network open, or does it use WEP or WPA? This will determine the tools required.
