It turns out the problem was the cab kit. I replaced
it with a spare and 
the
  machine worked great. On closer inspection I found
some corrosion and
 possible evidence of a previous battery leak, so I am going to take it 
apart,
  check it and clean it up.
 The other thing that made me suspect the cab kit is that the act of 
pulling the
  serial cable out (not unplugging the terminal) would
cause the machine to
 reset. MicroVAX II does this if you switch off the console terminal while 
the
  terminal is connected.
  
Just a bit more info on this.
I tried cleaning up the corrosion, and that briefly seemed to make a
difference, but then I realised the problem persisted. I looked again and
realised that the corrosion around the DE-9 pins was a bit bad. Initially I
thought to solder some jumper wires around pins 2 and 3, but when the solder
would not melt very easily, I found that it kind of flaked off under a bit
of heat and physical pressure. This made me think that although I was
getting continuity with my DMM, the joint was not that good. So I desoldered
the whole DE-9 connector, cleaned the board with PCB cleaner and then
resoldered it back.
This seems to have fixed it.
Regards
Rob