Finally managed to get everything working after getting the error below via Software Update:
Strangely enough, when I went to turn off my Mac last night, I was then prompted to either 'Install Update then Shutdown' or just 'Shutdown'. I chose the latter.
Here are the steps that I took before downloading/installing update:
1) Turn off iMac
2) Unplug TimeMachine HD
3) Restart iMac and launch Disk Utility
4) Verify / Repair Macintosh HD
5) Download Lion 10.7.3 Client...