I got it fixed but it is rather strange. I made two changes this morning. I turned off the windows gagdets through add/remove programs, then I renamed my Wow folder (it had a naming convention from when I used multiple folders). I then removed Wow from the IS menu and added it back in.

When I reloaded the sessions naming was back to normal i.e. IS1,IS2 etc. So I reinstated the windows gadgets and loaded a few on the desktop and IS still worked fine. So it must have been the folder name. I had restored the folder from my Windows Home Server backup when I loaded the Windows7 RC, if that has any bearing on things.