I used Win32DiskImager on a Windows machine to write the Kali2 ISO to my 64GB USB Flash Drive.
I then mounted the USB drive on a linux system and used gparted to convert the "unallocated" space to an ext4 partition named "persistence".
I created a file in the persistence partition named persistence.conf with the word "/ union" in it.
When I now boot from the USB into Kali Linux, selecting the boot option in the menu for "persistence", I do have some persistence (a folder I create on the desktop persists after reboots for example)
BUT - system changes, like resetting the root password does not persist. It goes back to the default password after I reboot.
Any idea how to fix this?