I thought I'd just post this up. After struggling with the creation of the webpart that displays drop downs using the SharePoint Object Model (i.e. SPSite and SPList) to get to the lists it turns out that the errors are related to the permission that the part has to this object model. (No surprise there then)
What was surprising was that there were a number of different solutions to the problem:
1. Install the dll into the bin
2. Install the dll into the GAC
3. Install the dll into the _app_bin
If the dll is installed into the GAC then it runs under full trust, if you install into the bin then Code Access Security Policy has to be applied and the wss_minimaltrust.config has to be edited, or installing into the _app_bin runs OK.
So far I have not found a definitive solution - even from good sources the response seems to be mixed as the best place for these dll's.
Well happy days!!