Fixed this problem for someone else, but thought you'd see it there...
I believe the problem is the FAT32 partition is slightly too large and the recovery system will not re-size it unless it is the only partition on the filesystem.
To fix this, log back into the recovery terminal then type:
mount -o remount,rw /mnt
sed -i -e s/6291456/4718592/ /mnt/recovery.cmdline
mount -o remount,ro /mnt
This should then restart and allow you to install correctly