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Thanks.
I was afraid that the frame shell may need some repairs. It must have happened removing the stuck bottom bracket that was in before. From memory, it went in fine and was sitting square.
The other bit you've described, kind of makes sense. Although in my last attempts, I only installed the DS and when tightened to a point, the spindle stopped spinning smoothly. Probably because that little 0.5mm threw the angle out a fair bit over the length of the shell.
I have also read about folk installing the DS and NDS simultaneously to try and align it. Although believe this is not recommended!
Gotcha!
Either the shell needs to be faced or the threads need to be re-cut.
If when you install the BB there is an equal and opposite gap on the NDS, then the shell is off. This shouldn't present you with any problems unless you are using an external BB, as the cups are independent and wouldn't be parallel with each other.
However, from what you wrote originally I think the shell is threaded on the DS. This means the NDS and DS cups don't screw in parallel to each other and when you tighten them up the axle needs to bend to fit in cups. Obviously it can't so it binds the bearings.