I posted this question in the Dimension but I now realise the problem doesn't lay with the template itself. I tried different templates and the problem occurred on all of them.
Basically if you click on the register account link on the front page, it doesn't take you to another page, rather the registration form stays on the homepage at the URL changes. It's easier if you actually look at the link. Like I said, it's not a template problem. I'm just wondering whether the index.php should be in the URL.
The problem was caused by sh404sef. I turned it off and the problem went away. The website is one hack of a lot quicker with out sh404sef enabled
Any thoughts on this? do we actually gain anything from having sh404sef installed? I'm led to believe that Google does not use domain names to increase search ranking.