Mystery Solved, sadly problem isn't.

IE7 apparently doesn't allow scriptlets to work by default when the site you're visiting is part of the internet security zone. It does however when accessing sites on the intranet zone (hence why our test box works).

The calendarpopup.htc encapsulates the calendar.htc file and using the calendar.htm file as it's content source. It using 'text/x-scriptlet' as the mime type so you need scriptlets enabled to use it. IE6 apparently uses this still and it's being phased out as of IE7.

Anyway, the shortterm fix is

Go to Tools -> IE Options -> Click on Internet Zone -> custom level... button -> Scroll down to ActiveX controls and Plugins -> Turn 'Allow Scriptlets' to enable.

Our problem is telling 4000+ plus users to change this so it unforunately doesn't help us. I hope the above information helps someone else.