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We have determined it must be a script problem do with sessions?
As you'll notice, there are an awful lot of XOOPS sites running without this problem... xoops.org being an example itself. So is it really realistic to call it a script problem? Therefore, I would seriously consider the possibility that your host does not know too much about what he / she is talking about. From the way you are talking, it is pretty much a one man band, possibly a third party reseller, who has very little experience or knowledge.
My bet is that there are issues with the way the php.ini is setup, maybe the php modules that are, or are not installed on the host, or memory restrictions on running scripts.
Have you tried logging in multiple times? When I had the problem on my previous host, I found that four or five login attempts would let me in, believe it or not!
