On the client side, the devices do work correctly when you manually select them from the drop down under Connect USB Devices and the drivers install then. The issue seems to be that the autoconnect isn't happening automatically. I have now tested this successfully on another model of PC with the same version of the client (5.3.0) and identical USB devices.
Where it falls down is when starting the client, under the USB Controllers in Device Manager, the VMWare USB Device controller using the vmusb.sys driver should appear automatically as it autoconnects whatever USB devices are connected to the host, and that have their VID and PID entered under the HKLM\VMWare,Inc.\VMWare VDM\USB\Allow Hardware IDs registry entry. However, on this PC (HP 8300) this does not happen, however it does work fine with another model of PC (Optiplex GX620).
I'm just trying to figure out why this is.