Finally had time to get back to this :-)
Have now set up a more lightweight and up to date system on a VM - kubuntu 14.04
Have managed to proceed further following instructions in: https://github.com/OnionIoT/OpenWRT-Packages/wiki/Setting-Up-the-Cross-Compile-Environment
Got as far as Step 6a: make
This initially failed, but I tracked the problem down to not having texinfo
Resolved by using apt-get install texinfo
Perhaps this should be mentioned in the above referenced link?