Well It all went pear shaped again.  3  server rebuilds and we still could not create projects.  I've been on the forums on the Microsoft site and somebody posted some usefull information regarding checks I could perform.  I tried their suggestions on my VPC and I could actually create Team Projects.  So using this information I think we are going to have another try tomorrow on the server proper. 

If I ever get this cracked I'm going to write a step by step guide.  The sort of thing I wish I could get my hands on now.