I've used the Vallejo putty Ian.

I like it for some applications, but you are right, it does not take vigorous sanding very well (I use a knife and very light sanding to get it to a rough shape). I often use it (the Vallejo putty) to fill in larger areas, but I put something harder and more sandable (like Mr. Dissovled Putty) over top. I use this technique, because I have had problems with Mr. Dissolved Putty shrinking alot and cracking/flaking as it dries, if applied too thick. Where as the Vallejo can be applied in relatively thick layers. Another technique that works with the Vallejo is after applying it to a recessed joint, I take and wipe the excess away with a moist cotton swab, that way there is not much sanding to contend with.

I mainly use the Vallejo, Mr. Dissovled, or Mr. Surfacer 500 to fill my seams, but  have used Tamiya epoxy putty and the good old Squadron green in the past. Right now I like the Vallejo/Mr. Dissolved Putty combo the best - works well for me.

Sorry for the novella, but I hope this helps.