We finally found that simply taking a 4.7k resistor from the board 5V to pin 7 causes the problem. On original UNO, this works.
Can you reproduce? (we can, each time, using any program, even 'blink')
Further to previous post, have replicated this simple test too - if digital pin 7 is high my Arduino Uno SMD R2 fails to run the bootloader led sequence (let alone run any sketch) after power cycling, until the reset button is pressed.
Any other Arduino Uno R2 owners able to replicate?