Can a +5VSB supply rail value of 5.4V prevent a PC from starting
Based on buying a new PSU and my system now working the answer seems to be yes even a small step outside of the accepted voltage range (+/-5% for the +5VSB rail) will prevent the PC from starting and no it hasn't caused any damage.
In addition a friend provided the following information:
The power-on circuitry in the PSU has various protections built-in for things like overcurrent and shorts.
Usually the PSU refuses to turn on if these kick in.