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I have managed to fix this... so here is the details;-
My local (dev) install is a fairly fresh install but not by any real measure.
The live install has been running for about a year.
Versions:
>php 5.2.5
>MySql 5.0.45-community-nt
>Apache 2.2.6
> XOOPS 2.3
The reason i was able to do it locally is it seems that i am the Admin user.
On the live system i am a Webmaster.
Although i have not seen it anywhere in the docs, it does seem that there is some limitation on admin actions. i.e. there is One Admin user that is more powerful than others. The live setup has a number of webmasters, but it is only the Administrator account that can modify modules.
Checking in the 'modify user' section of the admin area, my account has all the same settings as Administrator, which is why i did not think it was a permissions issue.
This is not something that we (myself and my boss) has done, the plan originally was to use XOOPS for its user and group functions so there has been no alteration to that aspect of xoops.
Thanks for your response, hopefully this is the true reason for it, but we'll see...