This does not sound correct. You can definitely create a subproduct with just 1 option. Please submit a support ticket so that we can look into the matter.

I now have the apparel add on installed which gives me the options on my BTO product. The problem I have is that I need to have a single option choice (just colour -NOT colour and size).

With this single option the system does NOT generate a sub product so does not allow for any choice in the BTO.

Is there any solution that would allow me to have a single product with multiple colour choices in a BTO with out listing each choice as aseperate product?

You cannot do so, unless you are using the Apparel Add-on and you are assigning an "Apparel Product" to the BTO configuration (e.g. a t-shirt in a Gift Basket, for which you select color and size).

The reason why product options cannot be transferred to a BTO configuration is that the product configurator manages the selection of products (with a price, weight, possible discounts, etc.), not attributes.

You can certainly add the "options" and BTO Only Items and assign those items to a category (e.g. "Colors" becomes a category that contains a BTO Only Item for each color).