Right so Gmail have change their requirements in the past month (July 2014)
http://windowsitpro.com/security/goo...synching-gmail
A more technical explanation about Google requiring Oauth 2.0 and not Basic authentication is in the 2nd post at
http://forums.mozillazine.org/viewto...f=39&t=2852231
So this would appear that Calibre needs to at least provide some kind of warning about or catch this problem during set up. Else lots of other people are going to run in to this same problem an not be as able or keen as me to figure it out. Especially since the error message is not informative.
The separate Gmail account is a decent idea, with the added benefit of not cluttering my account with automated mails. A bit annoying though.