After struggling for ages I managed to fix this issue but backing up my library, deleting everything and then dropping everything back in and building a new library.
Then a few weeks later I had an issue where I couldn't change the Media Kind of a file once it had been matched. The file was an audio book and it seemed that there was no way to get it out of my music library without downloading extra software or turning off iTunes match, changing the Media Kind and then turning Itunes Match back on. I did the latter and worked fine but once Match was back on I had the same old problem it getting stuck with only a few songs left on Step 2.
So I managed to solve this after a lot of messing about. I did all the trouble shooting on here like reinstalling itunes, reseting permissions, deleting songs that werent syncing etc. None of them worked and I didn't want to go through the painful step of deleting the whole library and starting again. I noticed that there were 5 files left to go on Step 2 when it got stuck and I found by going down my library that there were 5 files greyed out with no download option. These 5 files were an audio book that I had moved to Books but the cloud seemed to think that they still existed and it was jamming Step 2.
I deleted them in Books and then dropped the 5 files back into itunes music. Itunes then listed them in the music section. I deleted the greyed out duplicates and that was it fixed!
So just check that you have no completely greyed out songs and if you do you need to drop them back into your library or somehow get them off the cloud (deleting them in iTunes doesnt work).