While this thread has been somewhat mixed, starting with sensors and ending with electronic issues, this is what I have learned from this exercise as far as sensors and other I/O functions are concerned, when mixed with switched mode power supplies.
It seems that there are SMPS's and there are SMPS's.
Besides having a linear wall adapter, it occurred to me that I have been using another 12v 1A adapter for years with the Arduino on another device without problems. It turns out to be an SMPS, which completely escaped my mind. So I guess, the filtering/noise suppression on the SMPS wall adapter is designed to be suitable for domestic use.
The 12V 12.5A big SMPS that is driving the TEC, obviously, is not intended for general use, is probably low quality and from what I can see its noise output is difficult to control. An oscilloscope will be needed to measure its output frequency, typically somewhere between 100khz and 1Mhz for SMPS's, and a I think, though I am quite probably wrong, a Butterworth filter designed specifically for it.
dc42 has provided a circuit diagram for the same purpose and I haven't had time to try it out as yet - but from recent reading it looks like a low pass filter.
I may strip down the SMPS wall adapter and co-locate it with the big SMPS, tapping its 240v supply. That way I can dispense with a separate adapter and retain just two cables - no power boards and general untidy c**p lying around to get tangled in feet and hands. The lead to the Arduino from the big SMPS is the shielded type, so I'll use that.
The other thing that has escaped my attention altogether, is that the power supply on the motor shield that powers the stepper motor is also SMPS - a mini one - to cut out the heat associated with linear power supplies driving heavier loads - it has not caused any problems.
So, I guess, somewhere in the back of my mind SMPS's are OK and didn't expect problems. Introducing the big SMPS, the effect on the Arduino is really disruptive and totally screws up the timing of the digital I/O, while the analog is just unreliable.
Thanks to everyone. I realise that you guys stretch yourselves around the forums, so it is much appreciated when you take the time to answer.