I appreciate you need to know the xampp version and operating system. I stated this in my original post and also where I listed the steps I had done. Its just a little frustrating when you ask for information that is already stated.
I have tried all versions zip, installer, lite, full. Same result every time. I am focusing on the light USB because by using a minimalist version I am eliminating possible suspects. You should know the difference between the different versions and the effects of those differences. Would instaling Filezilla make any difference. Are the components in Lite the same as in the full version. I am getting the feeling we are just clutching at straws stumbling around in hope that changing something works.
My plan is to trial and error all versions again and combinations including other software solutions or install components individual. I think the solution is to be found by focusing on the error message (cannot resolve hostname). I dont think ant-virus or firewalls would give that error.
If and when I stumble across the solution I will update this thread with the answer or culprit.