must have been a cache problem – issue resovled itself overnight.
found the answer – I followed the instructions here – http://learn.iis.net/page.aspx/280/install-wordpress-on-iis/
First I downloaded and installed URL Rewrite 2.0 – http://www.iis.net/download/URLRewrite
Then I added the following to the web.config file in the WordPress root:
<rewrite>
<rules>
<rule name="Main Rule" stopProcessing="true">
<match url=".*" />
<conditions logicalGrouping="MatchAll">
<add input="{REQUEST_FILENAME}" matchType="IsFile" negate="true" />
<add input="{REQUEST_FILENAME}" matchType="IsDirectory" negate="true" />
</conditions>
<action type="Rewrite" url="index.php" />
</rule>
</rules>
</rewrite>
And all works now!