It seems that the folder in which the package was attempting to delete files from had a few files which were not expected. The names of the files closely matched a known recent trojan, although were not exact. The files were marked as system files and so were not readily visible when assessing the problem. One of the files was $RECHCLE.BIN.

A virus scan was run on the folder (well the whole server actually) using a well known product with up to date definitions and this returned no problems. The duff files were removed and the package was able to successfully complete.

I think that the files may have been moved to the folder as part of an archiving procedure from a client. It may well be that the client was compromised with the virus and some of its payload was copied to my server folder.

All seems well now.