Thanks for the tip, but YES it is enabled. The problem is more of a "corrupted" background (black) rather than the normal grey. This is only on my laptop (running XP Pro SP3) - it runs OK on my desktop machine (also running XP Pro SP3). I can also see a little of the desktop backgound through some of the toolbar area!
Just started IE8 again so that I could show you a screenshot .............. and the problem has gone away!
Solved, but I don't have the foggiest why!