Hello Little Coo
Thankyou for the help, but I have found the problem.
After an hour of searching the Adobe Photoshop Forum it turns out OSX 10.4 adds in a keyboard shortcut that conflicts with the CMD/Option/Tildi function in Photoshop. Below is a copy of what it tells you to do to correct it.
So glad it wasn't just me being a fool and getting it wrong.
Thanks again for the help
Scoopex
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Command+Option+~ (tilde) no longer selects Luminosity in Mac OSX10.4 (Photoshop CS2/3)
Scott Weichert - 04:32pm May 27, 2005 Pacific
Apple added a new shortcut to it's keyboard settings which conflicts with this Photoshop shortcut.
In order to correct the issue you must change or disable the Operating System shortcut.
1) Launch Mac OSX System Preferences.
2) Click the Keyboard & Mouse icon
3) Scroll down to Keyboard Navigation
4) Expand the Keyboard navigation menu and find the item titled "Move Focus to window drawer"
5) To change the shortcut, highlight this item then click on the shortcut itself on the right, then press the keys you wish to use. You can then exit out of System Preferences.
6) To turn off this shortcut Uncheck the box to the left of the title then exit out of Mac OSX System preferences.
Return to Photoshop and the Cmd+Option+~ (tilde) shortcut should then work.