@unltdlove2u How did you create that ubuntu-16.04.img in the first place? Sounds to me as if this is just your KVM image file, right? Well with FOG the steps to create an image is: register the machine (as well KVM should work if all network and DHCP is setup properly), schedule a capture/upload task and let the client upload its disk contents.
What you are asking for is a way to convert your KVM disk image into a FOG image. Might be possible but it’s not supported. Search the forum for convert vmdk and such VM disks. I think some people have done it but it’s probably a lot of work and I am not sure it’s worth it.
For dm-crypt/LUKS you need to let FOG do a sector by sector copy (also called dd) as it can’t read the encrypted filesystem stuff. The FOG image will be very big as it contains unused sectors as well.