Okay, this is always the way. I have found an answer to this issue as soon as I posted my issue :)
I found the original answer here:
code.google.com/p/getk2/issues/detail?id=149
In short it appears that there is an issue with the K2 language files. I did notice that this issue only started to happen after I had installed AceShop so who knows - I'm not a PHP expert. That said the following solution works for me.
Correcting the Item display issue
Open
administrator/components/com_k2/models/items.php
Find:
$query .= " AND i.language = ".$db->Quote($language);
Replace with:
//$query .= " AND i.language = ".$db->Quote($language);
Correcting the Category display issue
Open
administrator/components/com_k2/models/categories.php
Find:
$query .= " AND c.language = ".$db->Quote($language);
Replace with:
//$query .= " AND c.language = ".$db->Quote($language);
Once you have made the changes to the files above and replaced them back on your server you should be able to see the Items and Category listings in your K2 Dashboard.
Thanks,
Neil.