Internal Storage is Encrypted Automatically

HELP!
I have a my Sony Xperia M (C1905) now for 2 years and I love it. But today, I was at home and when I started noticing that every time my mobile is showing that the apps and programs have been stopped working ... I was going crazy trying to figure out where it was coming from and switched off the phone..

I turned on my phone and it was asking me to enter a password to decrypt storage... I've never seen this before, I've never set a password or encrypted anything. I had a pattern unlock set for my screen but that was it. Nothing is happening.. my Internal Storage is not showing.. Xperia M has 4 GB of Internal storage but it is showing only 126 MB of space.

I've tried everything, removed the battery, removed the sim, ran the update service, tried to do factory reset, and then I tried to repair it via using SONY PC companion even it is also not working.. Everywhere I go online people say this is a SONY Xperia M problem.. I tried to unlock Bootloader but it failed.. so I can not flush the Firmware too.. Nothing is happening.. Please Help....