I have found his issue in 2 instance
1st instance the entire c drive was excluded from scanning :-) i know its funny but this was the case.
2nd instance the SEP install was corrupt. had to un-install & re-install the client. Please find the document below.
http://service1.symantec.com/support/ent-security.nsf/docid/2008111107390448
Hope this helps !