OK, 12hrs later and I'm getting there....
It turns out that the "Uno" I received uses an ATMEGA8A-PU and a CH340 USB-Serial chip.
So - step one - get the CH340 drivers installed, then try the loopback test - yippee! I'm talking to the board.
Step two - I need a board definition ("Arduino NG with mega8" does not work). I added the following to boards.txt:-
And bingo, sketch uploads ok and serial port monitors the output. I have managed to get it working on both Vista and XP.
I'm still disappointed at areas of the IDE that are clunky, but at least now I can play with my 'duino.
Here is the beast - look closely at the photos - it evens shows a Mega8! :-http://www.ebay.co.uk/itm/261359381032