We finally got guest login working again, by opening the mdl_user table in the database and returning the id=1 user to username = "guest" with as password "guest" (We used a random user to change the password to guest and then in the database we copied that salted password to the Guest User ID.)
We also changed the "1" under Deleted to "0" (As it appeared Moodle had been removing and recreating the Guest User in the past).
Then we opened the mdl_config table in the database and changed the siteguest value to "1".
And then we Purged all cache.
And then it started working again normally (before this the guest ID was treated as a normal user by Moodle (i.e. it could edit its profile and post in forums etc.) So, issue fixed, solution and solved (in case someone is searching wih these words as search terms ).