Update and solution...
The problem in this case proved to be the PATH variable..
Setting the PATH through Control Panel > System > Advanced System Settings apparently only changes the path for the currently logged on user?
Running this command:
EXEC @rc = master.dbo.xp_regread@Hive
SELECT @RegistryValue RegistryValue;
Shows the PATH variable actually used, which did NOT contain the path to the iFilter.
Altered the corresponding key HKEY_LOCAL_MACHINE > SYSTEM > CurrentControlSet > Control > Session Manager > Environment >PATH using regedit to include the path, re-registered the iFilter, dropped and recreated the full text index and everything works fine!
Not sure whether this is me being slow or whether the documentation is just poor but hopefully this might save someone from premature hair loss!