Thanks for the help !!
I tried ccleaner and the info from that link but since the file has not been left redundant from an install, it didn't work.
I've already cleared the thumbnail cache so no thumb.db file exists for the destination folder or source folder.
This is so bizarre !! I've restarted several times and done a full disk cleanup and still, when I move this icon file to the destination folder, the old icon file replaces it. I've tested this in other folders (and even the desktop) where i've deleted an existing icon file and copied across a new one with the same name and it still happens.