Thanks Fabien and Christophe for pointing me in the right direction
I finally got the MPICH2 to install properly and of course telemac was always correct and runs in parallel mode.
I searched other forums and found that my problem was a common query but often not answered. The following information may be of use to others trying to get windows7 to work with MPICH2.
The error with mpiexec curs if the smpd utility used by MPICH2 has not been installed properly, usually because MPICH2 was not installed when logged in as Administrator (different from user with Administrator privileges). Open an administrator command prompt from Start->All Programs->Accessories->Command Prompt-> Right click run as administrator. Click YES to the user account control about modifying the computer and make sure that the command window that opens says Administrator at the top. You can then enter mpich2-1.4.1p1-win-x86-64.msi (or earlier/ later version) and this will bring you through the instalation putting the MPICH2 files in the directory c:\opentelemac\mpi\ (not the default which places them in C;\program files\MPICH2\.
Verify that c:/opentelemac/mpi/bin is on your path. In this prompt type smpd -install. You should receive confirmation that MPICH2 Process Manager, Argonne National Lab installed.
Then perform the following in administor prompt window:
smpd -install
mpiexec -remove
mpiexec -register (giver user name and password)
mpiexec -validate (it should return SUCCESS)
smpd -status (it should return 'smpd running on <hostname>')
You are now ready to compile telemac and run in parallel