HALF BIASS!
Well with nothing to lose I took the top off the Denon DR-M4 and made some adjustments. Aligned the heads (very slight adjustment), adjusted the bias while recording, this was way out from what it should have been (yes, there is a manual setting inside on the circuit board plus the auto setting which makes its own adjustments), adjusted VU meter levels (were showing too low during recording/playback), verified the test recordings with 3 of my other decks (especially with the JVC), great sound on all.
Now when I switch between tape and source during recording, it is hard to detect the difference between the two, outstanding. Even on a type 1 its hard to tell the difference unless you have dolby off and have the slight tape hiss. Even when recording on the BASF Chrome Extra sounds outstanding now. For all these adjustments I used headphones and then with the room speakers to be sure. Tested with TDK D90, TDK SA90, BASF Chrome Extra II, Sony XR60 Metal performing auto tune function on each before recording, all tapes record fantastic now.
A New capstan belt has been installed, and Idler Tyre so the deck has actually been serviced as stated, it was just not 'tuned' in the bias, level and VU meters. The person who sold this deck must have thought the heads were gone on it, and were looking to get more money than it was worth if that were the case.
It took a day or so to realise something was really wrong with this deck when it came to playback and recording quality, had to do lots of testing between decks, at first I thought it was just a different sound, but it was too far out to be the deck character itself, Denons sound better than that. This deck is not tape fussy like once thought, now adjustments have been made, I love it!
Time to clean the dust off those circuit boards then its finished (and I can now do some serious recording with it).