Thanks for your reply. I followed your instructions and generated a .csd file from one of the examples. Then transferred the file into the Csound folder and typed-in the command line that you gave me. It works without any errors and creates a file named DAC in the outputs folder (waves). So as you said it must be that blue does not recognise csound for some reason or could it be that csound cannot locate the .csd file (as it is not automatically placed in the csound folder)? I don't really know if that has anything to do with csound rendering audio or not.
I have got the csound book now and am learning the language. It is very kind of you to suggest to arrange to have a chat online. I do have MSN messenger and Mirc for IRC; so whichever you find more convenient.