Thanks again for replying
Let me have a go at addressing your points;

1. While i agree, it was my attempt at adding a some sort of feature where i could see what has happening with the microcontroller and i belive it does it, at least to some extent.
All its going to tell me is that if the uC has hung. And its told me that. It certainly works even if the LCD is unplugged the LED will flash.

3. I see what your saying, i've not implemnted the code as you've suggested, the led now keeps blinking which is at least a step forward i guess;P

WAIT_LCD:
        mov	LCDDATA,0FFh		;make P0.7 input port
        CLR	RS		;RS=0 access command
        SETB	RW		;R/W=1 read command
LCD_WAIT_BACK:	
        SETB	EN		;E=1 for H-to-L pulse
	NOP
	NOP
	NOP
	NOP
	MOV	A,LCDDATA
	CLR	EN		;E=0 H-to-l pulse
	JB	ACC.7,LCD_WAIT_BACK		;stay until busy flag=0
	RET

4. See Above

Well i appreciate your comments and suggestions, seems to have made an improvement, any more??:) Im going to have another look at the initialization procedure, looking at the datasheet for the samsung controller, its not clear ( unless i've missed it) if there is an order of initilisation i.e function set- display on/off