I would take all the hay and stuff out of his cage. That will help him to understand that the whole cage isn't a big toilet. Do you have a litter box in there, its hard for me to tell! I assume that you do since you're trying to litter train. LOL
Anyway, after you take the bedding/hay out of his whole cage, replace the litter box and put the bedding in JUST the litter box. He's still young, so he's going to have accidents, its to be expected. BUT you have to stay on top of scooping up the stray poops and putting them in the litter box. If he pees in the floor, take a corner of a paper towel and sop up the pee and put it in the litter box. That will help him smell his own waste in the box and he'll start to understand. Also, you could put some hay either IN the litter box or in a rack above it. But you'll want to make sure that he's sitting in the box and eating the hay. Since they like to potty while they eat.
I would make sure that his litter box is going to fix his whole body in it as an adult. I don't know what kind of rabbit it is, but most of the time a kitten sized litter box does well. Or I have a huge one for my tiny rabbit who pees over the side! haha. But since he'll be in it a lot eating hay and whatnot, you'll want to make sure its big enough for him to lay down in. My rabbit frequently lays in the litter box, its gross but its just what they do!
I think you're using some sort of wood shaving. Those aren't the best for pee absorption and they're not the best for odor control. What I use and a lot of others use, are the wood pellets. You can get them as feline pine from chain pet stores, or from like a Tractor Supply, you can get them as equine pine. They're very affordable at TSC at $6 for 40lbs. 40lbs usually lasts me around 5-6 months. Or you might be able to find some at Home Depot or Lowes as the wood stove pellets, but make sure they don't have an acceleratant in them. Or if you didn't want to go that route, I think carefresh or crittercare are good at absorbing pee and odor. There is also yesterday's news, a paper pellet.
-Equine pine-
http://www.tractorsupply.com/webapp...ory_rn=&top_category=&urlLangId=&cm_vc=-10005
-Yesterday's News-
http://www.petco.com/product/3050/Purina-Yesterdays-News-Paper-Based-Pellet-Cat-Litter.aspx
-Carefresh-
http://www.petco.com/product/3370/C...ed_Dog_1-_-Carefresh Natural Pet Bedding-3370
Lastly, it takes patience and time for him to learn the litter box. He might get it over night, but he might not. Also neutering, I've heard really helps them get the litter box habit down 100%. There will probably always be stray poops until he's neutered, thats just part of having a rabbit. But if you could get him to pee in the box like 98% of the time, you're doing well and you could probably consider him litter trained!
I hope that helps! Good luck!
PS. AWESOME enclosure set up!