*Instead of looking for something wrong, purposely look for something right.
By nature, we are accustomed to trying to correct and perfect things, so we tend to worry too much about looking for what's wrong. By finding what they're doing right tends to make students feel better about themselves (because they're doing something right!) and instills confidence in them to correct the "wrong" stuff themselves and as a result get more positive feedback.
Now I'm not saying that we shouldn't correct the wrong stuff at all, so here's how to address that:
*Look for the root cause of the problem.
By finding every little thing that needs to be corrected can cause frustration in both the student and the instructor. The student feels that there's so much stuff to correct that they're practically wasting their time and not learning anything, and the instructor frankly gets tired of having to constantly correct the student whom he/she feels isn't learning anything at all. Find out what is causing the problem and work from there.
*Ask the student how they feel (about a particular technique, kata performance, sparring match, etc.)
What they tell you is the key to how you approach your feedback. Believe it or not, many problems can be corrected by themselves when this is done. The "improper" way they're doing something could be a misinterpretation on their part or they could simply be doing it the way they were taught. Of course there are other examples; the key is too listen.