There are plenty improvements in upcoming 2.3 client. Should be out in a day or two. (please, come back to me if you will still observe it under 2.3)

I just clicked around the site, changing sections

mrspidey 1203159115 ff8ca599096d53dad99a355ab820e4b9 0 67 Registered 1 - BC
mrspidey 1203159169 ff8ca599096d53dad99a355ab820e4b9 0 67 Registered 1 - ARCADE
mrspidey 1203159231 ff8ca599096d53dad99a355ab820e4b9 0 67 Registered 1 - BC - this is where i for a wrong room id
mrspidey 1203159362 ff8ca599096d53dad99a355ab820e4b9 0 67 Registered 1 - FORUM
mrspidey 1203159486 ff8ca599096d53dad99a355ab820e4b9 0 67 Registered 1 - BC - enters room no problem

It's definately adding some info, so I don't really know why this is happening.

Do you have phpMyAdmin? (Can you observe your session table data after each click on your website?)

Hi again,

I'm actually using the CB login module, not the smf or joomla default one. After some further testing I can see way it seems to happen - if i login and almost immediately access the chat component it logs me in no problems, however if I idle a little (10 mins), or go into other sections, and then I try to use the chat - I get prompted to login, if i just click the chat link again I get logged in - not quite sure why.

That could very well be the case...I think you do use another module for login procedure. That would explain why you have to click few times for chat to send correct data. Module is not updating properly data in core Joomla table __session

I think it's because of you are using
smf login module.
that module is not using the original joomla mysql tables is it?
or are you using cb login module?