Next attempt.
Plugged Duemilanove back into Vista PC today - same upload error as described in forums. Messed with boards.txt and serial settings - no luck.
Switched to XP box, same problem.
Unit finally started working when I ran a multimeter between Gnd and pin 1 (reset) on the ATIMEGA328 chip (to check pin voltage) and pressed the Reset button. Suddenly the old program on the board reloaded and I could upload fine.
My current theory is the reset switch on the board may be dodgy.