Hi thought I would update here as I have spent around 2 days trying to get to the bottom of this.
Adobe said it was OSX Lion issue, Apple said its not Lion as it works on other lion MAC so the end result was a fix by 2 stages.
1 re-start MAC while holding down shift key until the grey progress bar starts. when the MAC starts up close the system completley, this clears all the preferences.
2 I then followed the previous advice from the help files (I think from Peter)
"There is a quick and easy method for doing this using the keyboard: close and relaunch InDesign, and IMMEDIATELY hold down Ctrl + Alt + Shift (Windows) or Cmd + Ctrl + Opt + Shift (Mac), and respond in the affirmative to the dialog asking if you really want to replace the preferences. There are two downsides to this method, however. First, you must be extremely fast on the keyboard (if you don’t see the confirmation prompt, you were too slow), and second, anytime you replace the preferences you will lose most program customizations, and using the keyboard method leaves you with no backup to restore them when the problem turns out to be something else"
Then tried Indesign and the package worked.
Hope this helps as it can be expensive and time consuming sorting this stuff out. I was previously asked to set up another admin account on MAC (by adobe help desk) and this worked with the packaging just the older well used account that caused a headache.
