When you start a weight program, you're almost certain to show a big water gain, since your muscles retain water to use in the repair proces, which you lose pretty quickly after you stop lifting weights. It's about 3 lbs for me either way -- I dropped 3 lbs in about a week after I stopped lifting weights in September, and I'm up 3 lbs right now after getting back to the gym last week. It certainly is kinda depressing -- 3 extra lbs of water makes a difference in the fit of my clothes, and makes me feel fat, bloated, and miserable. I'll be much happier in a couple weeks when I've dropped a pound or two of fat, though, so it'll be worth it.
OHGal, I'm not surprised you're having trouble lifting if you're doing the '72 Atkins thing -- induction and lifting generally don't mix well, and the old-style Atkins is considerably lower-carb even than induction (at least, if I understand the veggie rules right). When I was really trying to lose weight, instead of in quasi-maintenance like I am right now, I was really strict on my non-veggie carbs -- like, 5-10g a day total from dairy, eggs, nuts, splenda, etc. -- but ate all the veggies I wanted. I like veggies, so I managed to keep my net carbs at 30-40 most days, which was fine for lifting weights. You might consider doing something like that -- loosen up on the veggies a lot, maybe add a little yogurt if you still need a bit more. There's a happy medium between induction-level and BFL level carbs, although everyone's varies a bit.
The only other alternative is to quit lifting weights until you're at your goal weight, then pick it back up. This one's a bad option, because you will eventually lose some muscle, so you'll actually have to go a little lower than your goal. And you don't even want to know how much it sucks to go back to the gym after a good long hiatus -- I was in worse shape than when I started working out in the first place. I am recovering rapidly, but those first couple workouts were god-awful. Think hard about whether you've really tried every possible combo of eating and lifting before you go there!
