UPDATE
Ok, so since my last posts I have:
Re-burnt the Activate disk, according to the settings in an earlier post (so I am now 100% convinced that I've burnt that bit rightly).
White screen appears with multi languages ("Insert this disk into a Xbox 360 blah blah blah")
Eject activate disk
Insert W4 backup
Disk spins for a bit
and on the dashboard is says "PLAY DVD" not "PLAY GAME".
Have now tried 3 different W4 titles and cannot believe for one moment that all 3 have been bad burns as in between these, I've burnt and played a W3 title, so....
- disks are fine (Verbatims)
- DVD writer is fine (Pioneer 112)
- 360 is fine (only 3 weeks old so thats cool)
- mental state is not fine! This is hacking me right off.
- Only thing that's gone right today is the result at Anfield

I hate to say this, but you do not have v1.6 flashed in your system. I had a system here that was 1.51 and was getting the same result, until I popped out the DVD Drive and read the firmware with JF and it was indeed 1.51 but a Samsung Drive. I upgraded the firmware to 1.6, used the Activate.iso and then it worked just fine.
If someone flashed it for you, you should let them know that it is not 1.6 and update it (or wait for 1.7[?]) to be released. If you flashed it yourself, update it to 1.6, even if you think it is already 1.6, and do it again.