Sure enough, this was the fault, I suspect the sensor had increased in resistivity and was no longer functioning. After a little umming and ahing I decided that I would disconnect this sensor with a sharp knife. The answer lay in the touchpad assembly removed for inspection (upon which the unit sprang into life - this is where the problem lay) I noticed where the magnet would exhert its force was near to a long thin sensor - labelled V1 on the circuit board. It was only when I positioned the removed lower plastic cover near the screen catches that I noticed a magnetic attraction - AHA ! Time to take it apart.
So how does it turn off I asked myself ? I investigated the clips attaced to the screen, alas nothing there either. So screwdriver at hand I opened up the unit to loof for the usual spring loaded switch, alas there was none. I thought also it must be something to do with the hibernation switch activated when the screen goes down. The Dell guy had had no luck with it whatsoever.
Thanks to the other post on this thread for getting me thinking why a friend's Inspiron 1100 wouldn't switch on despite power led lighting up.
Inspiron 1100 and other Dells fix for Hibernation mode
