install -c -s -o root -g wheel -m 444 -fschg libscrypt.so.2 /usr/lib
install: /usr/lib/libscrypt.so.2: Operation not permitted
*** Error code 71

Any ideas what might be causing this?

Thanks in advance,
John

Probably an elevated securelevel keeping install from removing the
schg on the *previous* version of libscrypt.so.2.  Before starting the
installworld, reboot under the *new* kernel, come up in single-user
mode, and if necessary mount your disks by hand before doing the
installworld.  

For best results, post questions in comp.unix.bsd.freebsd.misc rather
than comp.unix.bsd.freebsd.