"The first one can be tested by trying to run 'pwd', eg 'rsh -n server pwd'. "

We seem to have a problem here from server 2 as root I can rsh to Server3 but not Server1
However from Server3 I can rsh to both Server1 and Server2
/etc/hosts on each machine has entries for the others
/.rhosts on each server has entries for the other servers

What else would be controlling ability to rsh??