@Francois I used the Diagonal Matrix because in the Tutorial https://neuroimage.usc.edu/brainstorm/Tutorials/NoiseCovariance#Variations_on_how_to_estimate_sample_noise_covariance the said If the target brain activity to your experiment is resting you should calculate the noise over the Resting recordings (i used about 2 min of resting for that) and the only use the diagonal elements. Which i though i did by using the Diagonal noise covariance. while creating the source.
or am i on the wrong track?
And thanks for the hint with the recommendations section. Got my answer.