SOLVED
I have had the phone for just under two weeks and all seemed to be running fine until I plugged the device into the PC today, I changed the connection mode from charging to MTP but nothing happened, I followed the instructions in this thread but still no success. I've attached a screenshot showing the discrepancy in the setting and notification bar.
The notification bar shows charging only whilst in the settings it shows MTP, though the PC does not detect it. I have also followed all instructions mentioned here. Please fix this bug, it is quite annoying.
Problem solved, it is caused by the new driver update (Microsoft – WPD – 2/22/2016 12:00:00 AM – 5.2.5326.4762), it seems to have issue with some devices-specifically Mediatek powered ones. The solution is simple, uninstall the driver update via Windows, if that isn't possible then use system restore, if even that fails (like in my case) then the driver can be manually removed using command prompt, as explained here. Now the device connects fine, just like it used to.
As far as I am aware the update has now been pulled so shouldn't install. I triggered the installation of the update myself after manually checking for updates-that's the last time I'll be doing that. 
I'm glad you got it sorted!
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