[I solved the issue below before hitting Send but thought it may still be worth posting in case someone else has the issue]

I had a newly partitioned hard drive running Lion OSX, it's capacity 720GB. Total amount of data installed was 170GB, yet Finder and Disk utility stated that there was 510GB used.

I emptied Trash and used GrandPerspective (a disk usage visualiser) to check the partition, but it could only detect 170GB of files.

I discovered the cause was by using Migration Assistant. It previously failed at the end of a migration twice due to an apparent software incompatibility (even though i was not actually migrating any software!).

I eventually then figured out that MA had created two new encrypted User Accounts (@170GB each) that GrandPerspective could not detect.

Deleted phantom User accounts, done.