OK so this is hurting now.
I have eliminated the possibility of this being an SSL issue by. configuring a test machine and registering a spare domain name that now point to it. I have opened up port 8080 on my router/firewall and I port forward 8080 to the test machine on the network There is NO SSL certificate installed and 8080 is the only port open on the home router.
I still get the same error message as in the original post and the url that is coming back from PayPal is
http://mydomain.org.uk:8080/AwareIM/req.awurl&BAS_SUCCESS=false
This seems to get truncated. the last bit is req.awurl&BAS_SUCCESS=false
Could it be that I have my external firewall locked down too tight and I actually need some other ports open to receive PayPal callbacks?. This is the standard vanilla out of box Paypal integration - nothing fancy.
Any help appreciated.