Even with delay compensation turned off, there is still a tiny amount of latency. You can overcome this by adjusting output sync's "MIDI Clock SYNC Delay". In my case, a setting of -25ms did the job. You can also leave delay compensation on and use the same method, the delay offset will need to increase, in my case to -91.5 ms.
These are not perfect solutions. If you have a sequence/arp playing in the KSP, when you first press play in Live the first note won't be in sync. Not a major issue in the studio, in a live situation, very annoying.
FYI, if you are syncing Live to the KSP you will need to offset the Input MIDI sync clock delay. Live is notoriously bad at syncing to external devices, when doing so you will see the tempo fluctuate in LIve.
Anyone come up with any other work arounds?