Featured Image set as blank?

Hi,
Since updating everything I have had some issues with the featured image function of WP. Today I narrowed this down to a clash with Attachments.

I have custom post types set up via WP-types and attachments running on one of those CPTs and not the one now in question.

I have cloned the site and turned off all plugins and working through them to find the issue. It appears to be Attachments.

With Attachements activated I cannot set a featured image on this particular CPT. Instead, in the media library, when trying to set the featured image, there is a blank image chosen. Despite what I chose it defaults to this.

With Attachements deactivated, the featured image section works as expected.

The site is at testing.oandb.info The affected CPT is sponsors. Currently Attachements is activated and all other plugins, apart from WP-Types are deactivated.
I guess I am going to need to provide login details for you to see this in action…
I guess you’ll email me for these.

I have tried various things like adding Attachements to this CPT. Removing other thumbnail sizes from my functions.php in case there was a clash there.

It could of course be something other, but I have exhausted my knowledge on where to look.

I would be grateful for a pointer…
Thanks

http://wordpress.org/extend/plugins/attachments/