After much work I have found the cause of my Launching problems.  It 
seems that on a PowerMac you MUST supply a valid ParentID in the FSSpec 
record within the Launch Paramater Block.  Failure to do so will result 
in the strange behaviour I have mentioned.  As to why this only affects 
native apps - I have no idea.

So the moral of this story is, use FSMakeFSSpec instead of direct 
assignment eg:

mySpec.fsName$    = "ApplicationName" 
mySpec.fsVRefNum% = SYSTEM(_AplVol)

Thanks to all that took the time to send me example code

Jamin