The problem is a depreciated RegisterPlus. arrg.
Thanks songdogtech. Will do but will also update here this once.
Disabled Register Plus and Sidebar Login and WP allows login and set password. Will check the plugins further.
Dave
ALSO I just made some modifications in another part of the application. They should have not affected this set up code. (Likely story! been there, done that with clients). The set up code has been in place for a year and only now decided to fail. Like I said, I can trace the code on the isp, via echoes, and it looks pefectly fine.
ANY suggestions are greatly appreciated! Is there a way of using a debugger on an ISP without xdebug?