I've updated to the latest driver and the problem persisted, however after some fenagling it would appear the problem is caused by Windows Ink. Turning Windows Ink off resolves the issue but of course you lose pressure sensitivity in Photoshop. As I understand, there are workarounds for that so I'll pursue the solution on that end.
Oh and yes! It seems that releasing alt before bringing up the pen tip is the culprit!
Thanks for your time CandyFace :)
*Edit*Ok, so just in case anyone else has to do this; to get pressure sensitivity back in Photoshop without using Windows Ink you need to create a new PSUserConfig.txt file in your Photoshop settings folder (that varies depending on which build of photoshop you are using.).
In the file write;
# Use WinTab
UseSystemStylus 0
This will force Photoshop to load up the legacy WinTab libraries that were previously used by Wacom. I don't even get why Wacom doesn't just continue to do so since Windows Ink is buggy as is. Cheers!