Figured it out after looking for ages at forum pages.
All I needed to do is, when in the Output Raster Dataset field in the Point to Raster tool, state the output raster as .img (i.e. C:/My documents/ArcGIS/raster.img), rather than leaving it blank which would convert it to .GRID.
For some reason when saving as .GRID causes an error (999998) on my system and crashes ArcGIS.
Hope this helps other people that are having similar problems.