Latest update on this issue is I fixed it myself here is what i did,
Basically we got hit with the conficker virus so we had to patch all our servers with KB958644 and also we applied GPO as per MS site
http://support.microsoft.com/kb/962007 So in order to fix my sql cluster issue (and in fact even to install the SQL cluster) you must
> reverse the above GPO if you have already applied it (as simply taking it out of the OU and running gpupdate will not reverse it)
> uninstall KB958644 on both nodes in your cluster, reboot
> now this is the bit that fixed my problem, i ran a command to reset the locat security policy on both servers (nodes) in my cluster which is this for windows 2008 (its slight different for windows 2003) secedit /configure /cfg c:\windows\inf\defltbase.i
nf /db defltbase.sdb /verbose
> i then rebooted, and made sure my cluster was working again
> then I reapplied the patch kb958644
> then ofcourse the cluster wouldn't start again so I re ran the above command on both nodes in my cluster, rebooted again and it all works
I hope this helps you let me know if you need anything else and I have just got off the phone to MS and explained to them what I did. They had this problem for over a week and couldn't help. cheers