Fixed it. Took me ages!
I think it was a combination of things but made more allowoverride all changes, then completely re-installed everything including a new .htaccess file.
I have a sneaking suspicion it might be something to do with wordpressMU plugin wp-config settings as now all is fine.
I would be interested to know if anyone else has managed to fix this in a more structured way rather than guessing?
Have a great day guys ??