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Using Windows File Explorer, navigate to the folder(s) containing your images and verify that your Windows login ID has read and write privs to those folders and their parent folder.
Thanks for your reply.
The Windows 7 login ID did not specifically have write permissions (i.e. it was neither "allowed" nor "denied") for either the files or the containing folder. However, if you go far enough up the directory tree then a grandparent folder does give the Windows 7 account write permissions so I believe these are inherited by the sub-folders. To test this, I tried giving the Windows 7 login "full control" over the relevant files and folder but it made no difference. Another reason I don't think it is a permissions issue is that LR is able to create the xmp sidecar files in the folder in question. (I am using CR2 files so although the "read only" error message refers to the CR2 file, LR should only be updating the associated xmp.) Having created them, you'd think it should be able to amend them?
What is odd is that if you close and reopen LR it will then update the metadata for some (but not all) files. The files it fails on appear to be random (i.e. they are not the same every time). Worse, if you select all files in the folder and force the metadata update, some of the files which were previously updated then throw up an error.
It's all very frustrating. Any further thoughts welcome!