Thanks all for the suggestions.

I have updated one of the computers in question to the latest beta (XPPro P4 2.8 Ghz 1Gb RAM) and the problem persists unchanged.
If On Access Protection is enabled while attempting to start Restore the freeze occurs, if it is disabled then all is normal.
This has been tried both rebooting between disable and re-enable of SR and not rebooting, there is no difference.
I am quite sure this is an avast! issue as I normally clear restore after making my weekly disc image backup and this has never occurred before, the only new software installed between last good config and now is avast! Home (previous AV was AVG 6 Free) and as I say the whole process goes as smooth as silk if avast! On Access Protection is stopped.
OK to address
S.Z.Craftec's suggestion that the problem is a corrupt OS or other problem I have removed avast from the other machine (XP home) and re-installed AVG 6, guess what? problem goes away!
I really like this software as all else works flawlessly for me and as stated stopping On Access scanning is a viable work around for the moment so I will persist with it but I do hope the developers will look into this.
Hmmm.. racing to keep up with this,
S.Z.Craftec I obviously cannot speak for
Gillie2tat but as for me one computer (the XP pro) has Hyper threading enabled, the other (XP Home) does not both experience the identical symptoms.
Gillie2tat To see if your problem is related to mine turn off On Access scanning and see if the problem still occurs.