When processing a delivery note, the default value in the BO QTY box is 9999.00, have I missed a setting somewhere for this to be set so high?

This number is so high because the system is designed to assume that you will want all of the items to be assigned to existing orders, so there is no setting to change this. There is a BO Release checkbox next to the this figure and de-selecting it will have the same effect as changing the value to zero. 

You can adjust the figure to whatever quantity you wish to assign to back orders (although it will remain as 9999 for future delivery notes), the system will then operate on a first come first served basis for allocating the stock.