I'm posting this as information for others who may experience a similar problem.
My desktop PC is used mostly for gaming, and was upgraded from Windows 7 as soon as Windows 10 became available. The upgrade process worked well and I was able to remove the Windows.old directory via Disc Cleanup. I wanted to remove these files due to a relatively small SSD as my boot drive, plus I'd also participated in the Insider programme on another machine and so had a positive view of the new OS and no desire to revert.
When the Threshold 2 update was released, I again upgraded the machine, but this time Windows.old could not be deleted. I initially tried Disc Cleanup, and when this didn't work, a 'Run as Admin' command prompt routine. The command prompt process didn't work so I repeated this process after booting into 'Safe Mode' - with the same result.
My final 'nuclear option' was Ccleaner, which was recommended by many when I searched for others experiencing the same problem. I don't know whether Ccleaner actually removed the files - it said it did, but the machine wouldn't boot afterwards.
This prompted me to do a repair installation, which worked... and also gave me back Windows.old, only now it was almost a gigabyte in size. I still could not delete Windows.old either. It was as if something in Windows.old was still in use by one or more of the system processes and was therefore protected.
At this point I did what I should have done in the first place - a clean install. This took less that 20 minutes, and then another 90 minutes to get the machine back to where I wanted it to be. Installing to an SSD from a USB drive, and then using a 'bulk' installer from ninite.com makes the whole process very quick these days.
Windows was activated immediately, which was my only serious concern. Microsoft have done a good job on this front.
The machine is now working as it should. And no Windows.old folder!
If you find yourself in similar circumstances after upgrading, don't just 'reset' the PC, go the extra mile and reinstall. Problems deleting Windows.old may well be symptomatic of other issues. Reinstalling will ensure you get the PC you should have.
Disk cleanup.
I've used CCleaner many times now to delete Windows.old. It has worked every time without any problem.
As mentioned in my original post - Disc cleanup didn't work (including the use of the system files option)
Their was a easier solution to remove the Windows.Old folder. Just had to make a bootable usb stick, with a program called
Windows 10 Recovery Tools - Bootable PE Rescue Disk . Made by one of our members. This program has lots of very useful tools installed on it, and would have removed the Windows.Old folder very easily Also other methods that would have worked too.
But Glad you solved your problem.
Many thanks for directing me to these system rescue tools. I'll take a look - it's always good to have various options available!