I think I may have found the problem, but would welcome the opinion of the experts.
I removed the fork caps and found that the gasket rings, part 7 on this fiche link, were rock hard and didn't appear to be doing anything much
http://realoem.com/bmw/showparts.do?model=0250&mospid=51882&btnr=31_0303&hg=31&fg=10 If these are not sealing the top of the fork legs am I correct in assuming that the air space is not being compressed and would result in the fork dive?
I have replaced the seals with O rings but havent had chance to test the theory as it is raining heavily at the moment so would welcome any comments. If my assumption is correct, will it do any harm to leave the O rings in or should I get some some new gaskets.