Just wanted to do a follow up on this.
It turns out that WoW didn't like me having 15 different accounts in my WTF folder. I deleted that and also cleared WoW's cache in the WoW folder. This enabled me to play again seamlessly. Not sure if anyone else has had this issue, but at least it appears to be solved for now.
Edit: Oh and by the way, thanks for the suggestions :-) This was drivin me crazy!
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