I've made a Live USB with Kali 64 bit LXDE 2016.2 image. To make it persistent, I followed instructions here - http://docs.kali.org/kali-dojo/03-ka...nce-encryption

When I choose Live option from Boot Loader, X11 is getting loaded on startup automatically (this confirms there are no problems with graphic drivers.). But when I choose Live persistence with encryption, X11 is not getting started. Upon further digging I found X11 is not able to create any files or move files around.

Below is the output of mount command.

Code:
dev/sdb1 on /lib/live/mount/medium type iso9660 (ro,noatime)
/dev/mapper/sdb3 on /lib/live/mount/persistence/sdb3 type ext3 (rw,noatime,data=ordered)
overlay on / type overlay (ro,noatime,lowerdir=/live/rootfs/filesystem.squashfs/,upperdir=/live/persistence/sdb3/rw,workdir=/live/persistence/sdb3/work)
When the actual persistent partition is mounted on /lib/live/mount/persistence/sdb3, the upperdir and workdir arguments of overlay is pointing to /live/persistence/sdb3 (which is non-existant). Is this the root cause? If so, how can I change these arguments to point to right mount point of sdb3?