Quick update on this:
I have since swapped out the M2 ATX with another DC power supply. It does the same thing!
However, this time what I did was connect up the laptop drive and boot - into windows okay. Now if i connect the 12v line and ground of the DW2500 to the molex the screen goes off - if I then remove the connections the PC begins to POST and then boot again.
So it sounds like there is something to do with the screen that is causing intially the computer to POST and if connected once the computer is booted cause it to reset.
This is bloody weird!