If a bowman with a Close bow is in the close zone (which seems likely) can they melee with bow vs sword for example - or have I misunderstood this!?
Can you clarify the question?
When you say “Melee,” do you mean use the Melee skill instead of Ranged? It’s unlikely that this is what you mean, but I just want to be clear.
Do you mean can a bow engage directly with a melee weapon? This seems most likely your intent, and this is an interesting question. I think the intent of Range Close is that the bow best operates within that range, but not within Reach. The distances are Reach, Close, Medium, etc. Melee weapons operate within Reach. It seems to me that, within Reach, an armed opponent can easily foul any bowshots, thereby making Ranged skill tests, within this range, ineffective.
It’s an interesting chance for a ruling, though. It seems to me that a GM can either
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Rule that Ranged cannot operate within Reach
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Adjust the Difficulty as usual (i.e., +D2 for Range C within Reach)
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Adjust as above but also add the Reach of the opponent’s melee weapon to the Difficulty
All that said, though, I expect that, somewhere in the rulebook, it specifies that Ranged cannot be used within Reach. 
Thanks - I’m not convinced a bow could be used (as it’s meant) in Reach - however I’m unsure on what the difference is between Reach and Close - presumably a bowman would be close bit not being engaged by any foes - however this would seem to make a bow with a Close settings fairly pointless - and quite dangerous
I think you’re right. One way to think about Reach is to be engaged in melee. So, someone with a bow in Close range is not threatened as long as there is another person engaging the enemy. But I agree—as long as the GM is going to be hurling squads of Minions at the PCs, there aren’t going to be many opportunities to use this bow optimally.