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So the problem is that I've installed (g)Vim and the arrow keys are moving around rather than going through command history.
It's a little complicated by the fact that there was an old version of vim installed by a different user (I've just inherited someone else's dev machine at a new job). I'm running on windows and have just deleted the vimrc under program files.
What setting has changed this behaviour and how do I change it back to normal mode?
Without a .vimrc vim will run in cp-mode (compatibility-mode).
Just create a .vimrc in your home-dir and the problem should be fixed.
The .vimrc can be empty, though it is advisable to put set nocp in there.
The full story can be found in :help 'cp
set nocompatible in your otherwise empty .vimrc. What's your reasoning for suggesting it?
vim -u ~/.vimrc will not automatically set nocp.
compatible to be automatically unset? Are you aware of the additional surprises that adding that line in can cause if the vimrc is sourced from an existing session? If so, don't you think those surprises are worth mentioning/guarding against?