Just an update. I found someone having a similar problem with a Seagate drive in this forum and they reformatted the drive. I deleted all the partitions and added a new partition and formatted it via another computer using Windows 7 Disk manager and then put it back in the computer and low and behold it worked in AHCI mode so installed Windows 7 and it has been fine.
Very strange that the drive was able to stop the computer completing POST when in AHCI mode and a reformat cleared the problem.
Perhaps it was an early hook into the drive to see if the BIOS could reload Windows from a hibernate file?
Also noticed that no matter which way round the SATA leads went the DVD-ROM is always reported on port 0 and the hard drive on port 1.