Hi Pete,
As a test i installed the 1.6.7 Arduino IDE on a new "fresh" computer, installed the Oak board, and ran the OakCLI in order to generate the config.json file
Which it put in:-
C:\Users\user.name\AppData\Roaming\oak\config.json
I then compiled and uploaded a new sketch ( a more complicated blink program to test the upload)
The IDE came back with
" sending File to Cloud, to flash device......
Device flashing started sucessfully.
Bingo......

Unfortunately my Oak board is plugged in at home some 30km away so i will have to check it is blinking differently when i get in.... fingers crossed
As far as my original problem goes, i updated the the Arduino IDE to 1.6.7 on my laptop ( this is the machinre which is giving me the issue. it is a i5 Windows 7 OS same as the fresh machine which i had no problems with ) after completetly deleting the 1.6.5 install and all the associated C:\Users\user.name\AppData\*.* stuff.
I still get the error

xtensa-lx106-elf-g++: error: CreateProcess: No such file or directory
Exit status 1
Error compiling.What i did notice is that the OakCLI configuration hadn't created the folder which tell the complier which Oak board to use.
C:\Users\user.name\AppData\Roaming\oak\config.json
Running the oak.exe now briefly pops up with a command prompt is says "No devices available" and then shuts down.
I have tried copying the config.json file into the same location but still no joy.
i wonder if this is causing the problem with the xtensa-lx106-elf-g++ or if is another issue or if my machine is in compatible with the xtensa-lx106-elf-g++ stuff
Cheers
Dan