Evo had the answer!
Kerio was interfering with update. Once I turned off kerio (left Norton AV on) it worked fine. Automatically updated to SP2. No problems evident yet. Back online as you can see.
Turning kerio off also solved my Norton Live Update dramas.
I think I am going to reset Kerio and start 'teaching' it again.
A big thanks for your help once more.
DeepC