Thanks hansmex.. I'd tried all that stuff already and copying into a new directory.
In the end it was something really silly.
Even though I was in the directory holding the sh3p file, I needed to specify explicitly the directory, not just relative.
ie.
/usr/bin/sweethome3d /home/joebloggs/downloads/plugin.sh3d

It must be something in the script that uses it for install.