Using the uncompacted mootools script did not make a difference unfortunately. However as a workaround, if I remove the following from both instances in the standard_text_editor.js ...

Code
for (var i in menus) {
if (menus[i] != html) {
get_object(menus[i]).style.display = 'none';
}
}

Then I can get it to work satisfactorily, the drawback is that popups do not close if you click outside or if you click on another popup. But as I don't have any real need for users to post code, media, or change the font/type size/colour I have just removed those elements from the template, leaving just the smiley table and general text styling such as emboldening etc. And if I just limit to images to 1 option (non-floating element) then that popup can be removed too.

I can live with that.
Thanks for your suggestions,
Phil