i thought it may be a permission error so i added this to the startup script too...

chmod -R 777 /home/vpopmail/etc
chmod -R 777 /service
chmod -R 777 /var/qmail

i know this isnt really secure but for now i wanted to make sure that it wasnt that.... :(

I can tell already you've been messing with your qmail install in a way you should not be.... I know this because you've got rcpthosts empty. If you installed according to the howto you posted, that file should have your domain listed in it. You should NOT have this file empty. If this file is empty, you become an open relay where spammers can send their junk to the rest of the world. Obviously smtp is broken, so no worries there right now, but you really will need your domains listed in there pretty soon.

That lock file is OK. I have one like it, and also one for rcpthosts and locals.

How about firewall concerns? I know you ruled them out in your very first post, but you really should be able to telnet to the smtp port. Maybe it's HOW you're telnetting? You should do a "telnet localhost 25" to be sure your firewall isn't getting in the way.

The response should be something like...

Trying 127.0.0.1...
Connected to localhost.
Escape character is '^]'.
220 yourdomain.com ESMTP

Also, when you run ps -ef do you still see those readproctile errors? Are they the same as before??

yes i realise the risks of having an open smtp but this was the way that I wanted to ensure that it wasnt THAT setting that was causing the problems :)

BUt thanks...

when i telnet i get this:

Trying 127.0.0.1...
Connected to localhost.
Escape character is '^]'.

and i still get the same errors after a reboot that i did before with:
ps -efl | grep "service errors" | grep -v grep

:(
anything else you can think of?

I previously had NO firewall on but now i have put one on allowing the needed ports still the same thing im affraid :(

hosts.allow and hosts.deny ... tcp wrappers - do they have any entries that restrict smtp access?