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This appears to be result of bug or limitation in quota
utilities that fail to locate the loop device between
ide disk partition /dev/hde11 and mount point /home
This workaround seems to work:
losetup -e AES128 /dev/loop2 /dev/hde11
mount -t xfs /dev/loop2 /home -o grpquota,usrquota
setquota -F xfs USER 1000 1000 300 300 /home
umount /home
losetup -d /dev/loop2
Unless you or someone else can pinpoint a bug in
loop-AES package that causes this, I am soon going to
close this 'bug' as invalid. Real fix is to use quota
utilities that are able locate loop devices between
partitions and mount points and direct their actions to
the loop device.