Mavericks setup fails: "the recovery system can't be created"
Apple recommends that you backup, erase and reinstall the original OS X, then try updating again, as per the instructions below. However, it is feasible to merge steps 3 and 4, installing Mavericks in step 3, then restoring your data to that OS.


  
  Make a full backup of your hard disk and all of its data (including your Boot Camp partition, which is not normally backed up by Time Machine).
  Erase your hard disk and create a single Mac OS Extended (Journaled) partition.
  Reinstall your original copy of OS X.
  Re-download the OS X upgrade from the Mac App Store and retry your upgrade install.
  


Source: Apple KB Article HT4649

Alternatively, you could use an app such as iPartition to delete the Recovery HD then extend the startup disk to fill the free space. Since there is now no Recovery HD, the installer should have no problem creating one from scratch.