OK, an update to this.

The only way I could find to do it was to place the object with transparent background on my background in photoshop.  By doing that I could see that all of your above advice works.  And then bring that work complete with layers into Illustrator for more post-work.

Forgive me... but there MUST be away of bringing those files straight into illustrator.. there just has to be. A question for the Illustrator foorum I guess !!!

Anyways thanks for all your help :)

Drky xxx