STUPID ME...Found the problem. I was plugging the ESC into the "battery" port of the receiver instead of "slot 2" which I now know is used for the accellerator.
All part of learning I guess.
Anyway took it for a spin in the local pool to make sure all the water tubes were working, then took it straight out in the surf. It was a lot faster then the original motor and worked great with the 4600mah 7.2v NiMh. More than happy with it now.
Will it go even faster with a 3000mah 11.1v Lipo 3S? I'm guessing the motor will be spinning faster with the 11.1 volts running through it.
Well I'm a happy man