It sounds like you're doing everything right. Perhaps try opening the tile image in Photoshop and choosing File > Save for Web and Devices. Then save a new version of the file.
Got confused and had the image orientation wrong 180 x 331 pixels as
opposed to 331 x 180 - the Portrait Tile is actually short and wide
As soon as I flipped the orientation I was able to upload the image and
sucessfully build the App. The App is now in the Aople queue.
Thanks for your help
Do separate versions have to be created for each rendition? So 360x662 for iPad 3?