Thanks for the suggestion. I've actually done a few things today.
First thing I did was:
which reduced the problem significantly.
I've got the videos being stored on a NAS box in the house, so yes the wifi limitations could be causing it, but looking at the Watch command you suggested, the link and level are both 100 (the Pi is 50cm from the WIFI AP). No errors or anything. But it still wasn't working properly.
So I've uninstalled and reinstalled Motion from scratch and it is much better. I've also done a autoremove and purge of some of the extra items installed to try and help clear things up.
So for now it is working. It would seem that the problem was many faceted! But thanks to the help, it seems to be working now.