I have downloaded 3_2_2,  created a virtual  folder, applied permissions and created a MSSQL Database.

I could not locate the web.config file in the download, should there be one?

When i run to install i get the follwing error;

[NullReferenceException: Object reference not set to an instance of an object.]
   DotNetNuke.Framework.Reflection.CreateObject(String ObjectProviderType, String ObjectProviderName, String ObjectNamespace, String ObjectAssemblyName) +379
   DotNetNuke.Data.DataProvider.CreateProvider() +19
   DotNetNuke.Data.DataProvider..cctor() +15

[TypeInitializationException: The type initializer for "DotNetNuke.Data.DataProvider" threw an exception.]
   DotNetNuke.Data.DataProvider.Instance() +0
   DotNetNuke.Common.Globals.GetUpgradeStatus() +305
   DotNetNuke.Common.Global.CheckVersion() +101
   DotNetNuke.Common.Global.Application_Start(Object Sender, EventArgs E) +314

I have had DotNuke running locally sometime ago, but for some reason I removed it. I am adding this as i could not alias the install folder to DotNetNuke, a previous ref existed; how do I remove this?

You need to rename the release.config file as web.config, and update a few of the settings . Please read the installation guide, it will step you through the process.

Cathal