Hi,
Many thanks for your reply. The screenshots that you were showing were working just fine, it was when it came to the course page where you can see the text that shows the group availability. What was happening was that it was being hidden from all but a particular group, that group could still see it anyway.
After doing a bit of digging with permissions, it seems that there was a permission to allow all groups to see all other groups, hence why students could still see the 'restricted' link.
This wasn't a bug per se, but none the less not an easy one to track down and was more of a usability issue.
Many thanks for your help.
Chris