Okay, so Microsoft seem to have added quite a bit of confusion with the over-type functionality in Word. Having thought that we now had this sussed, we found that one user was unable to enable over-type mode in the Advanced settings as the checkbox was disabled.
After hours of Googling, testing, experimenting, etc we stumbled upon the reason by accident.
If you have Track Changes enabled on a document you cannot enable over-type mode.
Hope this saves someone else hours of frustration!
Beside The Seaside 
Thank you! THis really saved me hours of frustration. But I don’t understand why Microsoft is so Track-changes-unfriendly, yet they invented it! Some of us always use track changes and we don’t want to accept the changes or stop tracking because we want others to see the changes we have made. I am baffled!