Is there a shortcut key combination that would cause the draw normals to display as in the attached image? If so, how do I get them to display correctly. This also affects how extrude region etc. operates. i.e. they are extruded horizontally instead of away from the face (if you know what I mean). 

When exporting as .obj and re-importing in a new scene the narmals are drawn as expected so I'm pretty sure it must be a shortcut key that causes this behaviour.

Ctrl-n ought to get all the normals calculated to the outside.

 CTRL - N gives same results. The fix is CTRL - A : Scale and Rotation to Object Data.