1. The chain goes very slack if I pedal backwards and drags the rear mech right up, is that a chain length issue or maybe something to adjust on the mechs? Changing through is effortless so I assume it could be chain related?
From the top of my head, check that every link in the chain can move freely. If you find any stiff links flush them out with WD 40 and give them a good old waggle by hand to free them up.
Did you remove a link from the chain when you fitted the short cage mech? If not, you may be right about the chain being too long.
Also, check that your jockey wheels are free turning and haven't gotten stiff over time. If they have, take them out, clean and re-lube.
You'll know that certain gear combinations, particularly big chainring with big rear sprocket and wee chainring with wee rear sprocket, or any comination with a significantly less than ideal chain line may not be suited to pedalling backwards.
Great bike, by the way. Best wishes with your restoration and upgrades.
Thanks, yeah if I remember correctly I did remove a link or two, serviced rear hub and got it nice and smooth, have bathed the chain in various concoctions and its looking ok, not too worn and links seem free. The jockey wheels on the rear mech were a little tight, they are nice and clean and lubed up, had a slight mishap with the rear canti so cant test yet. Will update with a new pic soon.