I solved this issue! Here is the trick I found out by trail and error.

I used this documentation to switch between HDMI and LCD
http://www.vesalia.de/files/RPi_LCD_User_Manual.pdf

Installing the correct way! (IT WORKS)
Then when you want to install just do this:
Before installing reboot your raspberry pi 2 and press left shift (by Tapping) your raspberry will then boot into recovery mode.
Now click the second tab which says boot options.
Now its fairly simple. Make a screenshot of these settings and remember especially this:
root=/dev/mmcblk0p7 rootfstype= ext4 (remember this number)
I then installed the drivers using the methods described here but prior to this i made sure the kernel was not updated (this may not be necessary)
sudo apt-mark hold raspberrypi-bootloader
Now the bootloader wont update.

Now do the following:
wget http://www.spotpear.com/download/diver24-5/LCD-show-151102.tar.gz
pi@myPi:~ $ tar xvf LCD-show-151102.tar.gz
pi@myPi:~ $ cd LCD-show
pi@myPi:~ $ sudo ./LCD35-show

Then your system reboots and BAM ofcourse the kernal panic. But hey you got that backup right?
Just use the numer you had first. I had to change from root=/dev/mmcblk0p2 to my old root=/dev/mmcblk0p7
Now reboot again and it works! Hope the BG staff will give me some credit for fixing this and explaining!

Have fun and let me know if you need further help. Mine works now on noobs 1.7 and jessie release (using own image)