The following article provides steps for associating iTunes with your relocated library.
Thank you that seems to have done the trick mostly so it is downloading the apps that had not been copied to the library before and they are correctly going into the D: however the backup I did went to the C:, is that as expected?
now to follow on from that;
is this permanent? ie so will I have to do this everytime I open iTunes? If so, what is the point of the Preferences directory path?
iTunes will continue to the same library until you switch to a new one.
The preferences path determines the media folder for future use, it doesn't change where iTunes looks for existing media, nor which iTunes library database is opened, however if you moved the entire iTunes folder to the D: drive then shift started iTunes to connect to it you should now be using a well formed library. If something slightly different happened see Make a split library portable.
The device backup data doesn't move with the library, but see relocate iOS backup folder for a way to move it...