Hi senter, i contacted the service provider but they said it must be the handset.
I had recently flahed the phone with the latest firmware ( R8BF003_RED52 ) but was'nt sure if this was the problem as i had never tried to send a picture message from this phone before,however i have got another K800i with (R1JC002_RED52) firmware which sends/receives picture messages fine so i think i will flash the phone with this firmware and see if it makes a difference.

Ps - i have tried various sim cards from different service providers and they all install the settings ok but it will still not send/receive picture messages.