Synergy autodetects 3 IP addresses with one in bold i.e. 192.168.1.86. See: http://screencast.com/t/Cf9Qkheq6Ln
Selected Configure interactively and added and named the second screen. There is a Config file entered in grey in the Config file field. I don't know the significance of this.
Returned to Client to complete client config. The Client says that the server IP is 192.168.1.81 - i.e. none fo those listed by the Server.
Entered the Client screen name and have tried: - the bold version from the Server installation. - the Server IP specified by the Client installation.
Both of them produced 'failed to connect.: Connection was refused.
Tried other IP addresses listed and found that 192.168.1.80 reported;'connected to server' and Synergy started to work.
I no longer have a problem but just wanted to flag this up if it helps anyone else.