Steve thank you for the paint....but it seems Nubee has found the answer. Without nHancer the problem does not happen and it was the only thing I didn't try
I know nHancer had to be changed to work with the 185 drivers, so it seems they may not have implemented AF correctly, at least as far as FSX is concerned.
I wonder if this is the case with Vista/Win7?
Sorry to have wasted you time Steve.
Just to add - you can still use nHancer to force AA and other optimisations, but leave AF as application controlled. I'm not sure what level of AF FSX applies, but it looks the same as the forced 16x I was using with nHancer.
Bloody hell Nubee - that last shot is mind blowing!