Since no-one has a posted a nice elegant and simple fix, I will post what I did.
I “solved” this issue using a brute force method whilst chasing a fix for constant high CPU utilisation that I was seeing (only on KDE- baloo was disabled and akonadi not running).
From a tty login (Ctrl-Alt-F2) I moved all hidden directories like .kde, .config, .local etc to different sub directory.
Then I logged in from the GUI and selectively moved/copied back those directories/sub directories/files that I was sure did not have anything to with kde config, for example .mozilla, .ssh, .config/google-chrome, .thunderbird, .ssh, .local/share/app (I did this before firing up the related applications).
Et voila, problem(s) solved, CPU utilisation is normal and favourites now work (had to add them again).
This method is very much using a blunt instrument :-(, however I didn’t want spend oodles of time trying to figure out what the underlying problem was - I could see that the same problem did not exist for some other users on the same box, so thought that this might work.
Be warned you may end up losing some application state/context/history.
Also be careful.