the Amp rating on the battery is misleading... that value is the amount of amps that you can potentially get from the battery but the amount of current that flows in a circuit depends strictly from the load (I'm sure it says A/h no just A which i something slightly different)
in this case the load is the LED which normally operates around 20mA so 0,02A @1,7V (red led)
150 Ohm is too low even for a 5v power supply
so what we need to "get rid of" is the difference from 12v and 1.7v Vr = 12 - 1,7 = 10.3
the resistor that we need will have 10.3V across it when the current is about 20mA
R = Vr / I = 10.3 / 0,02 = 515 ohm -> closest value = 560 ohm
there you go
massimo