User Import with inactive status
The Feeds module - https://www.drupal.org/project/feeds - provided me with the solution to this issue.

Feeds allow you set both the Status of the whole import, and a per user status by adding a Status column to your CSV,

For users who have the same problem, this how you do either:



1. General Status for User Import

Once you have installed the Feeds module go Structure/Feeds Importer/User Import - admin/structure/feeds/user - and go to the Settings option in the Processor section, here you will find an option to set the Status of all imported users:





2. Status column in Import CSV

If you want to add a status column to your CSV file, allowing some users records to be imported as active and others as blocked, then you need to edit the Mapping in the Processor section - again at admin/structure/feeds/user. Add a new field to the mapping selecting 'Account Status' as the target field.

Inside your CSV use the values 0 or 1 for the status - where 0 is 'blocked' and 1 is 'active'. 

Note: this will override any default status defined by the steps outline in Option 1 above.





I can also confirm that VBO operation to unblock users will also result in the correct Activation emails being sent out to the users (provided you have an activation email configured in Account settings)