I have deleted all locations and re done them, it is not the issue. The problem is that the macbook is still sticking to the xserve set internet connection even with new locations and I can find where to release it as it was not set up in a standard manner but thru command line in terminal on the server. As I dont know what was done (it was about 8-10 years ago and I hadnt a clue about macs at the time, I cant undo it and set up the machines correctly thru WorkGroup Manager and preferences (Network) then set the proxy settings.
This is pants - I am going to try reverting one of the macbooks to a previous build, breaking the server connection, test by connecting at home then upgrade to mavericks.