Fixed this, if anyone else is having the same problems..............
I logged into the inbound mailbox and moved all of the emails into a temporary e-mail folder, this then free'd everything up and the system started working as expected again.
I'm guessing that a mail had a dodgy character in the body which was blocking this causing a domino effect. Sure there's probably a SQL script to run against the database to narrow down which mail is causing the problem, but I couldn't find it so have just moved all of the e-mails out.
Hope it helps anyway
I've seen problems like this in the past with a "dodgy" charactor somewhere secreted in the mail body text. In my case it was a special char in the signature block of the email in a very small font. Took some tracking down I can tell you!