An update.
It seems that although I thought I did enough to keep the machine turned on I did not turn off all the "hibernate" type functions, so sure enough the issue came back; actually a lot worse as I could not even get the iMac to start up (unless in Safe mode).
I found an app (free on the app store) No Sleep and installed it (in Safe mode with pink lines). I left the iMac running over night. Then the next morning rebooted, hoping that the heat would be enough to enable a start up not in Safe mode.
Unfortunately I still had the pink lines and could not get the boot up past the logo.
I decided to just let the iMAC sit there for a while at the logo with the "wheel" spinning. The pink lines went away after an hour or so- but never booted up.
So I rebooted but unfortunately the first reboot after the lines going away I still could not get past the logo (now with no pink lines though).
Second reboot however I got in, no longer in Safe mode.
It has been 3 days now and no lines/ green dots - the No Sleep app is keeping the machine on 24x7.
To me this really seems to show this is a heat issue i.e you need the heat on.
I installed the app Mac Fan Control (from the web) to have a look. My stats (with no pink lines/ green spots) are;
CPU Core 0 = 43
CPU Core 1 = 42
CPU Diode = 66
CPU Heatsink =63
CCD Proximity = 37
Mem Controller = 47
Unfortunately I did not install this when I had the pink lines/ green dots to compare the heat but for others it may be worth looking at your heat levels?
Of course this is a poor answer as I don't really what to run the machine 24x7. But not sure I want to fork out for a new something, and are not really confident enough to "bake" as others have.