Yes sorry, I meant chord not key.

I created the repeat using the yellow repeat button/tab. A window opened titled "Edit repeats and endings". I typed the appropriate values in there. There is two bars in "1" and two bars in "2". It runs through the repeats as you would expect but on the first repeat (after "1") it stays on the chord of bar 8 (end of "1") until it gets to "2" where it starts following the proper chords again.

Is it down to me using the wrong technique to enter the chords or the wrong settings?

Thanks for your patience