Right its solved!

I had to use a different version since the mode1 3-1/63 must have partially loaded and prevented the mode2 3-1/63 from overwriting.

Used this post Xoutpost.com - View Single Post - MKIII OS version 3-1/63 from Angelych to overwrite with his 3-1/64 image.

For others, the process I followed is:

1. Waited 20 mins with car off and nothing in CD drive.
2. Turned car onto P1.
3. Waited 5 mins.
4. Inserted firmware CD (link above, burned with ImgBurn).
5. Waited a few minutes and then software update screen appeared.
6. Update took around 6-7 minutes. Spat CD out when done and asked me to remove CD from caddy and hit OK.
7. Restarted and complained about no Nav CD.
8. Inserted Nav CD.
9. Vehicle position is incorrect. I've read it takes a little while to sort itself out.

Thanks to all for helping me out