So I fired up the game after saving before bed last night and the "continue" and "restore" options are completely greyed out, all I can do is start a new game? I did this to see if it would then allow me to load but no joy - AND the save option is now completely greyed out as well??

I was a good 2 hours in I don't want to have to replay it all - seems like a very odd issue?

What OS are you using? Supposing you are on Windows, the game should save the data into this directory: "%USERPROFILE%\Documents\Broken Sword - Director's Cut\"
You should check this folder for possible permission or security issues: maybe there is some program that prevent you to create files there.
If that folder is empty, I'm afraid you have to start the game again, or download the save game data from the web (from here, for instance).