Thanks for the reply
Here's some further info:

The Hyperlink is actually stored in Word correctly. Even the mouse over reads correctly. It is the actual call from Word to the browser where it is corrupted.

I also tried the same Hyperlink link using Publisher 2007 and Excel 2010 - same problem, so it looks like an Office problem.

Then I tried the hyperlink in Windows Live Mail - works fine.

The other interesting thing is that the link fails all the time in Firefox and Chrome (if set to default browser), but with IE:

1. On my netbook computer the link always works in IE
2. On my desktop, IE failed consistently until I set another browser to be the default then set IE back to default again - from then on, the link worked in IE!!!

Very weird