OK, running the "Canola2 Cleanup" tool on my Nokia 770 worked perfectly, solved the problem and I was able to install Canola2 at beta 5 and Canola Tuning on latest version of OS2006. (The Canola Cleanup tool should be easily found in the application Manager if you have Canola2 installed already on your device)

I did need to "Hard Re-boot" the Nokia 770 after installation of Canola2 to ensure underlying elements were set up correctly. (i.e to actually playback with sound, mp3 files that Canola2 could see)

Canola2 appeared to Lock up when trying to play "Discovery.avi" (Could not traverse menu structure with stylus or hardware keys) requiring battery to be removed to close unit. (On/off button ineffective) Further testing seems to suggested that waiting for a long time, the device will eventually recover.

Therefore my personal conclusion is that Canola2 beta 5 would be fine for Music and Photos, but I would definitely not promote using it to play movies on the Nokia 770 as the combination of mplayer and Canola UI seems makes the Nokia 770 totally unresponsive. [Just use mplayer on its own as it works well ]

Be aware that mp3's currently seem to take a little time to start the first track playback when you have just started Canola2 for that session (Once first track is played, seems more responsive) Photos are fine but if you attempt to use the new zoom feature (Which works well) Canola 2 can become unresponsive. (Not as unresponsive as with movies)

I also noted some problems with sound level being out of sync with player indicated level at times, which appeared to be solved by adjusting sound level in UI.

I have not tested podcasts and Iradio on Nokia 770 using Canola2 Beta5

Beta5 release of Canola2 whilst providing more of the latest added features, seems to make Canola2 too unstable for use on the Nokia 770's Hardware. YMMV