This is quite unexpected. I have 45Gb of video footage and so moved it to my NAS and thought i’d created a sym link by creating an alias to that directory in my local Movies directory. As iMovie completely failed to recognise the new alias as a sym link, i had a peak in console and discovered that a Finder created alias is not a sym link and hence doesn’t work! How very odd!
After creating a sym link in the terminal, the problem is solved.
Odd! I’m sure i’ve missed something!