Went through several people and finally got a resolution on the matter. It was actually all caused by one setting not being checjed, and that is Settings>Security>Screen Lock>Pin>Require pin to start device. As soon as that was enabled, Airwatch rexognized the phone as compliant and all troubles were behind me.
There are certainly some reported issues with Lollipop out there, but I have yet to experience any on my Moto X. So far, its my favorite release of Android by far. One thing I can definitely credit Lollipop with is longevity of battery - the performance is so much better than it was on KitKat.