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I found it easier to rotate the pattern to start with:
this is the minimum you need for it to repeat. the black line is your bounding box; set it to no stroke/fill and send it to the back. drag the whole thing to swatches.
there it is filling something. then rotate just the pattern 45 degrees:
@dougofakkad - Thanks a lot! I wanted to be sure I wasn't going crazy. The trick with this pattern is that the corners of the squares are cut at an odd angle, but it looks like you actually did find an end to the pattern in this secondpost. I wish there was an easier way to do this, but I guess geometry has to run its course.
Well, I double checked my pattern and found a couple small discrepencies that prevent it from being perfect when viewed up close. If a pattern like this has to be dublicated that many times to make it swatchable, it's not worth it. Here is a study I did on a 30 degree corner cut to a square and how it patterns:
I took a square, and cut 30 degree angles out of 2 corners, and patterned it. I rotated it so the angle cuts are vertical for the pattern. As you can see it get close to finishing every 4 lines, but when you select the red squares, you can see the gap in your selection box where it doesn't touch one side or the other of the square. So I took the red squares and repeated them, that is the dotted line below. Each square gets lower, so I copied the line up one, that is the blue dotted line, and found where it finally catches up to complete the pattern. It takes another 188 lines before you can complete this pattern. This pattern is very very easy to manualy create, but very very difficult to set up as a swatch pattern. I think the problem is the swatch patterns have to be linear patterns, and this pattern would be much easier to make if it could be programmed as a radial pattern.