Touch Diamond Freezes When SIM card inserted

Hi there,
I have a rather annoying problem on my Touch Diamond. I bought it two days ago as a used handset and it works fine when there is no SIM card in the back. As soon as I put the Sim in the device behaves strangely and freezes for long periods of time. It repeatedly opens a window saying "how are you?" and says "STK Services" at the top in the info bar. I'm used to it saying "how are you?" from my old phone - I think it is some stupid message that vodafone use.

I have also tried clearing the storage and formatting the device but it hasn't solved anything.

Please help! I can tell this is an awesome phone from using it without the SIM card and I'm desperate to get it up and running.
Tim.