Thought I would try manually opening an index.htm file 
using Firefox - success all the links (and images) now 
work!

Seems IE6 (under Windows XP SP2) is having a few problems.
As I said in my first post clicking Browse sites doesn't 
do anything (no errors either). Manually opening the 
index.htm using IE6 opens the page but messes up all the 
file paths (accepting the active content warnings doesn't 
change the situation).