Craig
While there is some merit to the suggestion from Vasilis I believe that there is a more likely explanation of your problem. The symptoms that you describe are most often caused by the setting of the config register (which is part of most password recovery procedures). It sounds like your config register is probably set to 0x2142 and it should be set to 0x2102. You can check the current setting of the config register by looking at the output of show version. Very near the bottom of the display will be a line that shows the setting of the config register.
HTH
Rick