Right think i have the solution to this now

. What sort of mouse do you have MuD?.
The problem was: My mouse is an Intellimouse, and as i changed the Option protocol back to just PS/2 when i converted it from usb to PS/2 to see if it made a difference, i never changed it back, which is why it wasnt picking up the scroll axis. I then changed the Option Protocol Back to "IMPS/2" and logged back into my user account and.....there you have it, it works

.
So mud if you have the same sort of mouse type as me, try that and add the ZAxisMapping option too, My mouse config is below: (Just the part that people may find helpful)
# **********************************************************************
# Core Pointer's InputDevice section
# **********************************************************************
Section "InputDevice"
# Identifier and driver
Identifier "Mouse1"
Driver "mouse"
Option "Buttons" "5"
Option "ZAxisMapping" "4 5"
# On platforms where PnP mouse detection is supported the following
# protocol setting can be used when using a newer PnP mouse:
# Option "Protocol" "Auto"
# The available mouse protocols types that you can set below are:
# Auto BusMouse GlidePoint GlidePointPS/2 IntelliMouse IMPS/2
# Logitech Microsoft MMHitTab MMSeries Mouseman MouseManPlusPS/2
# MouseSystems NetMousePS/2 NetScrollPS/2 OSMouse PS/2 SysMouse
# ThinkingMouse ThinkingMousePS/2 Xqueue
Option "Protocol" "IMPS/2"
Colonel-1990.