Firstly Noel, Thanks for your thoughts. I am afraid the more you look the
less you see! The New dialogue was indeed set to "Open in Grayscale" No
Idea why though!
Thanks for your help
You might have had a greyscale image stored in the clipboard. If, for instance, you right click an image in your web browser and choose 'Copy', and go to Photoshop and do Ctrl n, it will bring up the New image file dialogue box with the pixel dimensions and other properties of that image now in your clipboard.