Hello Mary & all.
The previous post may have inferred that the problem was resolved & caused by a full HDD. It MAY have been caused by it but deleting files & re-running an upgrade did not work.
I tried to connect a USB pen drive but could not get, due to lack of knowledge, find it or mount it from the rescue console, chroot /mnt/sysimage
I did find in /etc/fstab  dev/sdc1  /media/Expansion_Drive ntfs  etc....  This was the Segate device I connected that caused the problem.  I also found later under /media/Expansion_Drive a 36Gb smeserver.tgz file the aborted backup to USB disk file!
I finally fixed, at least sofar by booting from the 7.4 CD-ROM (thank you Mary) & sme rescue  chroot /mnt/sysimage
From here I used mc & navigated to /boot/grub & manually edited the 0 byte grub.conf file to read :-
default=0
timeout-5
title SME Server (2.6.9-89.0.16.EL)
      root (hd0,0)
      kernel /vmlinuz-2.6.9-89.0.16.EL ro root=/dev/main/root
      initrd /initrd-2.6.9-89.0.16.EL.img
This did not boot as the image file did not exist, good grief, so I altered (back to rescue console etc.) & amended to the last latest image in /boot which was 2.6.9-78.0.22.EL.img
This now boot up just fine.  I will I guess temporarily alter the NIC settings & see what an update & upgrade does & report back.
So connecting a new Ext. USB HDD out of the box (NTFS?) & running "backup to USB disk" is not recommended & not in the manual (RTFM!)
I am not to sure if it is worth testing this again to see if the fault is reproducible or not.  many Other things to do here really.
Cheers,
Miles HC