In fact, I had purchased two docks and two Surface Book units, so had an extra to test with. Over the weekend I swapped docks. This completely solved the display issue, and I have since returned the one bad dock; the display issue had nothing to do with drivers or OS apparently, since the other dock just worked. The replacement dock works as did my second dock, so it is confirmed to have been a bad unit.
The USB issue has not re-appeared today after update, I will update this thread if I see it again.