Is the drive encrypted with BitLocker or not? Is the activation only for creating a recovery key, or does activation encrypt the partition?
The volume is encrypted but the encryption key is saved "in the clear"
The volume is indeed encrypted but BitLocker is "suspended." This means the Full Volume Encryption Key (FVEK) used to scramble the data is saved to disk in plaintext where anyone can access it. This means they can access your data too.
You can verify this for yourself. Assuming your volume is C:, run
manage-bde -on C: from an elevated Command Prompt (no, this won't turn BitLocker on...it's already on):
PS C:\> manage-bde -on c: BitLocker Drive Encryption: Configuration Tool version 10.0.17134 Copyright (C) 2013 Microsoft Corporation. All rights reserved. Volume C: [Windows] [OS Volume] NOTE: This command did not create any new key protectors. Type "manage-bde -protectors -add -?" for information on adding more key protectors. NOTE: Encryption is already complete. BitLocker protection is suspended until key protectors are created for the volume. To enforce BitLocker protection on this volume, add a key protector.
Notice the last statement in the output:
BitLocker protection is suspended until key protectors are created for the volume.
According to Microsoft's documentation about suspending BitLocker:
Suspension of BitLocker does not mean that BitLocker decrypts data on the volume. Instead, suspension makes [the] key used to decrypt the data available to everyone in the clear. New data written to the disk is still encrypted.
What does "Waiting for activation" mean?
The reason BitLocker is "waiting for activation" is because no Key Protectors exist for the volume. BitLocker uses protectors to control access to the FVEK. Notice the output of
manage-bde -protectors C: -get:
PS C:\> manage-bde -protectors C: -get BitLocker Drive Encryption: Configuration Tool version 10.0.17134 Copyright (C) 2013 Microsoft Corporation. All rights reserved. Volume C: [Windows] All Key Protectors ERROR: No key protectors found.
Until at least one protector is created, BitLocker cannot leave suspended mode and the Windows UI will report that it's waiting for activation.
How to Finish Activating BitLocker
There are several ways to activate BitLocker in this situation. I prefer doing so from the Control Panel as it allows you to enable protection without requiring a Microsoft Account:
Finish the wizard.
The result of completing this wizard is that your volume encryption key is "protected" and no longer saved to the disk in the clear, meaning your encrypted data is now actually protected from unauthorized access.
How did BitLocker get enabled?
Windows may have automatically enabled BitLocker after you completed the Out Of Box Experience (OOBE) if your device supports Modern Standby or is HSTI-compliant. Since Windows 8.1 BitLocker has been automatically enabled on these devices. This means many new computers will come from the factory with BitLocker enabled by default.
The 'Waiting for Activation' you see in the BitLocker Drive Encryption CP means that the drive is ENCRYPTED, but it is waiting to release a recovery key of some sorts.
In the BitLocker Control Panel, there should be an option to 'Turn on BitLocker.' A window should appear which will guide you through generating a recovery key. If there isn't an option, or it throws an error, you could try this:
Attempt to remove the partition's BitLocker Encryption, and then re-encrypt it. That may fix the problem.
You can find more information on this MS Forum.