Resolved this issue thanks to McAfee support.
On the particular MacBook Air I was using MacBook Air 4.2 OSx 10.7.2 i7 EEPC for MAC was unable to create the partition it needed as there was no disk space. There was 200 GB free on the OS so I resized this reducing it by a 5 Gb (over the top I know) using Disk utility.
As soon as I done that it became active and started encrypting.
IMportnat point, make sure you reboot after the resize before it encrypts otherwise when you boot it will not be able to mount the OS and will fail to load. Decrypted and reencrypted and it was fine. Must have been down to the lack of reboot.
Make sure you also have the latest HOtFix on there as well (705225)