It would appear that the directory path in the dropbox file was showing the incorrect path:
PARENT_DIR = os.path.expanduser("/var/lib/dropbox")
DROPBOXD_PATH = "%s/.dropbox-dist/dropboxd" % PARENT_DIR
I tried editing the file as per some online suggestions but this didn't work. However the following worked fine for me. Open Terminal and type:
sudo rm -rf /var/lib/dropbox/.dropbox-distdropbox start -i
This removes dropbox from your system and re-installs it.