Hi all.
Problem solved. Apparently I overlooked that SetSecurityImageBrowserPath needs to be set or that requirement is new since v6. My old config files did NOT have this set and it worked fine. I gues the lesson learned here is you can't just overwrite the new v6.4 config files with older versions of the config files as you will be missing stuff :-(
Thanks Terry - my policy file was already set for this actually BUT without your suggestion I wouldn't have looked back to find out what I stated above.
Cheers