Yes it should but I believe it's the application itself and not the phone, I know I have never encrypted my phone or sd card so there should be no reason for a password prompt whatsoever. The only thing I can think of is since I did a OTA update I need to find a OTA specific root. Possibly like this Spectrum root I found on the forum. It's still not a fix for this problem though, I would prefer this method of rooting but if the other works I will use it until whatever is causing this is figured out and a fix is made available. Going to try the OTA Spectrum Root I found now.
Edit: It worked, it actually rooted my phone with no hang ups and no problems at all, it must have been because I upgraded to ICS OTA. Either way I am happy to use this root now, I'm willing to try other methods to get the other root method to work if anyone has any ideas I haven't tried yet though.
Edit:
http://androidforums.com/spectrum-all-things-root/637556-root-lg-spectrum-ics-ota.html is the link to the OTA ICS root I used and can confirm worked for my Lucid if anyone who had issues with the other method wants to try it. Quick note, before I found this method I tried the method in the post, I hard reset my phone and had the SD Card out of the phone when I rooted, not sure if it would make any difference but just trying to provide all the information I can.