Just upgraded to MT 4.1 from 3.2 used a fresh install and just imported the old database....

When creating a new entry none of the menu items (edit) show up the images are all corrupted - even on the main dashboard page and the log in screen whatever images are associated with movable type do not show up or show up corrupted. The blogs themselves display fine.

Any suggestions as to what might cause this?

First, try a hard refresh: hold shift while hitting the refresh button. If things still appear corrupt, maybe mt-static wasn't correctly or completely uploaded; try again.