So more and more attempts today, I am using the guided encrypted setup built into Kali and I select my USB drive.

After some digging I have found my syslog and debug error message here is the pastebin.
http://pastebin.com/3XPDgbNg

Long story short I found this as the error.
Code:
Nov  8 04:34:57 base-installer: error: The tar process copying the live system failed (only 243824 out of 333771 files have been copied, last file was ).
Nov  8 04:34:57 main-menu[1021]: (process:26222): tar: write error: No space left on device
Nov  8 04:34:57 main-menu[1021]: WARNING **: Configuring 'live-installer' failed with error code 1
Nov  8 04:34:57 main-menu[1021]: WARNING **: Menu item 'live-installer' failed.
So I thought ok maybe the guided setup isn't giving me the right space, so I did a manual partition setup of the LVM and Encrypted drives with my root / and home, swap space and boot partition giving them all a bit more space "500MB for my boot" 6GB for home, 6GB for root and the remainder on my swap space....

However I STILL got the same issue with the same error stating there is not enough space? I have no idea what I am doing wrong the USB stick is 16GB and from what I read on the FAQ and guides it was a 4GB minimum so I should be fine space wise...