If anyone has a better solution please post it or reply to this one. This is just how I was able to fix my install and how people can avoid the issues I faced.

When running the update commands posted on kali.org to upgrade form Kali 2.0 to Kali 2016.1 with the Nvidia drivers from Nvidia (ie. NVIDIA-Linux-x86_64-352.79.run) the drivers will fail to update properly leading to a failure to boot up with the GUI environment. In order to ensure a smooth transition to Kali 2016.1 you need to do a few things first. This will also help should you, like me, find yourself having already tried to update to 2016.1 from Kali 2.0 with NVIDIA drivers installed from the .run binary and you get the dreading "Something went wrong.... Cannot recover" error message on bootup instead of the beautiful Kali login screen.

1. Reboot into recovery or run level 1. (In order to run the next command the NVIDIA driver needs to not be loaded, using recovery or run level one does this for you.)

1. Run the NVIDIA installer you used to install the drivers with the --uninstall and run through the prompts to remove the NVIDIA driver.

2. Reboot

3. You will boot automatically into run level 3 but you will not have a GUI. At this point you need to run:

#If you have a proxy then run these commands first
    export http_proxy=http://{proxy ip or hostname}:{port for your proxy, ie. 8080}
    export https_proxy=https://{proxy ip or hostname}:{port for your proxy, ie. 8080}
#If you do not use DHCP to get an IP address on your network
    ifconfig {your preferred interface, ie eth0} {ipaddress} netmask {netmask, ie.}
#Ping google to verify connectivity
#If icmp packets (pings) are blocked you can verify connectivity by running this
    wget google.com
#Reinstall Nvidia drivers from the Debian repository
    apt-get update
    apt-get install -y linux-headers-$(uname -r)
    apt-get install nvidia-kernel-dkms
4. Go through the prompts that the previous command will bring up to install the Nvidia drivers that are compatible with the upgrade process

5. Run the commands to upgade to kali 2016.1

    cat << EOF > /etc/apt/sources.list
    deb http://http.kali.org/kali kali-rolling main non-free contrib

    apt-get update
    apt-get dist-upgrade # get a coffee, or 10.