Bit of an update - I've been chasing the problem around the car for a bit...
Started off with checking the OD bulb in the dashboard - turned out to be blown which answered the question of why it did not light even though OD is permanently disengaged.
Next, I located and dismantled the relay - there were a number of cracked solder joints which I re-flowed as best as I could. Stuck the relay back in the car and boom - it now clicked on and off when the gear shift button was pressed. The dash light followed suit so all was looking rosy.
Took the car for a spin but the fuse blew again before I got up enough speed to see if the OD was working or not.
Stuck the car up on ramps the following day and can now see that the white wire coming down from the area of the shifter and plugging into the solenoid harness has some serious crumbling insulation issues. It was definitely in contact with the transmission casing so this explains the blowing fuse.
Hopefully I'll have time to repair this section next weekend.
Fingers crossed that sorts it and doesn't just lead to a further problem with the solenoid :) I'm not keen on blanking it off if so - we head up to the Adelaide Hills quite often so a switchable overdrive is always handy.