When I investigated further I noticed that SQL had not been installed at all so decided to install manually, add the myserversql instance and changed to mixed authentication mode. I had to switch off password enforcement rules and could then set the appropriate password. I then re-ran the SQL server install through myinstaller and this time everything was installed and myserver has been working ok for the last couple of days. As it is working I'm assuming that nothing more needs to be done?
I was curious so ran the installer on my other WHS 2011 rig and it installed first time without an issue, so go figure! I did not modify password enforcement rules, but it certainly does look as though that was the issue on the other server.
As I needed to make some changes to kick the tyres and had already spent time on the install I simply decided to take the plunge and have now upgraded. I like what I see so far