Cannot find license for MS starter edition 6.5e

A recent change in licensing has meant I've had to switch from Modelsim Altera Edition to the ModelSim Altera Starter Edition. Even though this is supposed to be a license free version of ModelSim I get a window exclaiming that it cannot find the license file. I quote verbatim:

Unable to check out a license. Make sure your license file environment variables are set correctly and then run 'lmutil lmdiag' to diagnose the problem. Modelsim-Altera uses the following environment variables to check the licenses (listed in the order of preference)

1. MGLS_LICENSE_FILE

2. LM_LICENSE_FILE

This is very confusing indeed!

Has anyone else experienced this? I appear to have done nothing wrong and have attempted the installation from scratch three times. Each time I have gone back to the web-site and downloaded the version for Quartus II 10.0 (which is the licensed version we have) and proceeded with the instructions.