daemon appears to be running ok:

But the wallet keeps giving me this error. Been like for a couple of days now. Restarted both many times plus the whole PC. Wasn't running latest versions but is now with no improvement. On Win 7. I haven't changed any settings.

Any ideas?
close wallet and re-open
Restarted many times...
Try opening a cmd shell and command "netstat -a" with daemon running.
Look for a line like
TCP 127.0.0.1:23081 MyHost:0 LISTENING
If you don't find it then your daemon is not listening for connections on the required port. If you do find it then there must be something preventing your wallet from opening the port, probably antivirus/firewall. Try a temporary disable of the firewall/antivirus if that's the case to verify if the firewall/antivirus is the culprit. If it is then you need to add an exclusion.