Sorry for delay replying, I've been working away.
Well the bike is now back together and running fine and without the oil leaks.
I bought the bike cheap because it had some faults, so don't know if the g/box had been overfilled. The input & output shaft oil seals were leaking along with the clutch rod seal.
I've adjusted the thottle cables and it runs fine now.
My friend has just bought a GS1200 and it has about the same amount of transmission play at the rear wheel, so thats reassuring.