Wow! It's fixed!
The link that Jigoku posted did not do all of the work.....but it set me off in the correct direction!
Basically it appears it was a Registry permissions problem.
When trying to run the SteamService.exe /repair I ran into a "Failed to install Steam URL Handler" error.......this set me off Googling and after a while I found
this article.
After a little digging in Regedit (wear your strongest underpants....

) it appeared that the registry keys associated with Steam had issues.....namely that they had no owners and no user or administrator permissions.
I added owners (Admins and my profile) to the Steam keys that existed and ran the /repair command again......I got a similar error !

I looked back in the registry though and sub-keys had been added underneath the Steam keys that existed before, so I did the same owner and permission changes to these and ran the repair command again......similar error.....but more sub-keys.....and so on (only three sub-layers of keys).
Ran the repair command one last time and it worked!
Demos, downloadable videos, and most importantly single clicks to add friends now work!!!!
Thanks to all involved in this thread.
I am crossing my fingers that Steam does not die on it's arse tomorrow after my tinkering!!!!