Thanks a lot for the tips guys, at least I know it should be working..
have just done another fresh install and followed Tib's instructions to install this time, but still getting the same thing..
There is plenty of data being logged into the txt files, and that all looks fine, it just won't show anything in Web Statistics. Its almost like its a permissions problem, server-manager can't see the txt files? I've tried delegating the Web Statistics to another user, but haven't started manually tinkering with default permissions yet.