Running DiskWarrior from Boot Recovery Terminal for encrypted disks does not work
It would appear that the instructions for are somewhat lacking and there are some missed steps and incorrect ones. After some trial and error here's how I got it running.

Drive is not encrypted

You can either run the USB as a bootable drive by holding Alt on boot. Or if you really need to run it from the boot recovery terminal you can skip steps 5-7

If drive is encrypted using FileVault 2


Install DiskWarrior on a working Mac &amp; enter key
Use the Bootable disk wizard to create a bootable USB
Rename the USB drive to DW &amp; eject
Insert USB into mac that needs to be repaired and power up mac while holding Apple + R
Open Disk Utility
Select drive and then select 'Unlock' &amp; enter password to unlock
Close Disk Utility
Open Terminal
Run command: /Volumes/DW/Applications/DiskWarrior.app/Contents/MacOS/DiskWarrior


DiskWarrior should now start and you can repair your drive.