So after a more testing, we found that the necessary xml files that are needed were not being pulled down from the Windchill server into the users APPDATA folder which caused the issue, what stopped this working, IMHO was still the AV or Disk Encryption combination.
Our IT Dept worked with the AV company and were recommended to apply a new Maintenance Release which they have and I rebuilt my laptop with both the disk encryption and AV.
Once rebuilt I proceeded to install DTI and it configured and connected successfully. Then tested this on another user who was getting the issue and they were able to connect and run DTI successfully also so it looks as if it was the AV DE combo.
Fed this info back to PTC TS and suggested this info be fed back to R & D to contact the AV company so that it can be added to their white list.
Thanks Scott for your help