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Hi, I sat my restricted licence two weeks ago. During my lessons with my instructor I was told that during the pre-drive check of brake lights/indicators etc if you are sitting a restricted licence, you must not start the engine until the examiner enters the car, as by legal definition if you are sitting in the drivers seat of a car with the engine on you are driving it (which you aren't allowed to do without a supervising driver until you pass the test), and you could be failed for driving illegally. However when I switched on the ignition and operated my brake lights, I was prompted to start the engine by the examiner. I thought it was some kind of trap to catch me out and I started panicking about pass quotas etc! Was the examiner wrong in telling me to start the engine or was my instructor wrong in telling me to leave it off until they enter the car?

I don't thing the instructor or the testing officer were wrong. The aim of the instructor's advice was clearly to let you know you should never start the vehicle without the testing officer's instruction, which by normal definition would mean that the testing officer is in the car.
However, the testing officer's advice was in keeping with good practise from a technical perspective. In other words, for the good of your car's battery, it is better for the engine to be running when operating lights and other electrical components.
I can't see any reason why an unlicensed driver can be sitting in a stationary car with the engine running, particularly if instructed to do so by a testing officer when he is in close proximity.
It seems that you may be over-thinking this matter. The testing officer isn't out to trap you.
I hope you passed!