Cooperative tethering bug

I have a truly bizarre situation, I dont know what to do.  I dont know if it is a bug, or im just failing to recognise an obvious key stroke/control option. But here goes.

When I play single player it all works fine.  I control red yarnie and do what I need to, then I control blue yarnie to do what he needs to, Cooperative puzzles are a breeze.  When I add a second player (want to play through with my wife) it bugs out,  The yarnies cant separate.  The visuals even indicate it with them tugging on each others strings.  If we hold right and left respectively our yarnies will run slowly away from each other while looking at each other.  The moment you try jump they can only jump towards each other.  If only one jumps he is pulled back mid jump towards the other.  I have no idead what is going on.  I dont know if there is a control/button to press to solve this.  If I cant solve it I have no use for this game as i bought it to coop with my wife in the evenings,