I sorted this out, I had everything right, but I needed to comment the proxy line in the mapmanager.mxml as per one of Robert Scheitlins posts on the old forum.
However i have another problem now that I hope someone can help me with. I managed to embed a simple mxml application in an aspx page with not problems. I was then able to run my asp.net website and redirect to the flex app from within there. I now want the same website to have the sample flex viewer embedded in the aspx page and redirect to that. I have implemented this by copying what is in the index.html into the aspx page but when i run the website and redirect to the sample flex viewer host page, I get an httpservice error.
Can anyone point me in the right direction please?