Ok, I've wasted far too much time on but it's driving my nuts and the IT guy is accussing me of just being stubborn but....
This is the error I get running a restore (or backup) using a loggin which has full admin rights to the server - I checked that the user could write/delete files from the offending folder in Explorer:
"Msg 3201, Level 16, State 1, Line 1
Cannot open backup device 'E:\dbbackup\EasternGroup_Database2K5_20060624.BAK'. Operating system error 5(Access is denied.).
Msg 3013, Level 16, State 1, Line 1
BACKUP DATABASE is terminating abnormally."
By the by, yes, MSDE can see all 3 drives using with xp_fixeddrives.
Thought (I don't often have these!) - I think this might not be Express sp1 they're running, but the original version. I'll get them to install that and see how we go.