Thank you Bluefish!
I've reinstalled WLM twice since this problem started, so I think I've got the latest version (build 8.0.0812.00). Unfortunately I still can't connect, even though the connection troubleshooter says everything is fine.
The next thing I'm going to try is removing WLM and putting MSN 7.5 on instead. After that the only thing I can think of is to remove IE7
This problem is definitely beyond my PC knowledge!
Thank you to everyone for the suggestions though. Much appreciated
Best wishes
-KiJi-