OMG I am a muppet, I found the problem. I did not realise what the setting in:
Site Settings->Component configuration->Software Update Point Components->Sync settings->WSUS reporting events
I had that set to "Do not create WSUS reporting events" which appears to disable status updates being posted to the wsus box from clients. I have changed it to "Create all WSUS reporting events" and things seem to be working now so far.
Cheers for the help though