Damo-K: I just tested this on the TG789vn and I am able to use the connection from one LAN port to another. As we are talking about different models and we're now seeing different behavior I probably won't be much more use. The only other suggestion I can make is to rummage around in the toolbox and see whether the Intrusion Detection or, more likely, the firewall sections have anything about isolating the LAN ports.
Good luck and just for our curiosity please post what you end up going with :)
Ok i dont know what happened, maybe it needed a hard reset or something but all is working now. I haven't changed any other settings apart from your original instructions. Thanks so much.