Okay found the issue and fixed it. I'll post in case anyone else has a similar setup.....
Both our Moodle 2.5 server and Mahara 1.6 server are behind Apache reverse proxies (https). On both apache virtual host instances on the Apache reverse proxy (VH for each server, Moodle and Mahara), I simply had to add "ProxyPreserveHost On" after doing this everything worked.