I have only used the FTS with Relate, but set the log to debug and check it - I think the FTS (client side) logs quite a lot. Also, make sure you can browse to the url of the search service. You should get the standard WCF service page.
Thanks for your help magnus, i got it working. There seems to be an issue with ms ajax and fulltext search for some odd reason, i removed all the msajax and it started working. Not sure why, but it did the trick.
Could someone please point me in the right direction. I have install and setup all the necessary config elements but when i use the re-indexing gadget, it seems to sit at 0%, then i look in the big table, there is a boat load of dds store entries. Am I doing something wrong?