cheers for getting back to me.
I actually managed to sort it out in the end, the fix being to create the project on the desktop instead of any of the external drives with no other applications running... and interestingly i had to transfer the FCP project on the main desktop hard drive and export fromrough compressor from there.
a few observations tho just incase you may have something to add;
i kept on being told "this project is formatted for windows so can't be opened on your mac" (or similar) and sometimes importing the asset would freeze at 99%.
My export was the elementary stream setting in compressor and dolby 2.0.
no menus... i couldn't get to the stage of making menus until the whole thing was fixed.
frame rate was 29.97 and it was M2v.
The strangest thing was that, altho i have had frustrating episodes with encore in the past, everything had been working fine previously and this was a random inexplicable issue.
normally it doesn´t matters on which exteral drive your FCP-project has been saved, it should work everywhere.
which version FCP do you use and which os do you have?
2.) "this project is formatted for windows so can't be opened on your mac" is another ugly bug from encore, it used to be fixed within encore CS5. even pc-projects could be opened on mac and vice-verca.
3.) why you used m2v instead of h264? h264 have a better picture-quality with lower bitrate.
finally: encore CS3 is horrible, CS4 is a big mess, even encore CS5 but it´s a lot better and have a lot improovements and bugfixes.