It seems that the resolve_path function in loco-admin.php is somehow not managing to resolve the paths to .po files correctly when I click on a .po file to edit:
Error: Bad file path 'E:\\WPTest\\www.2/wp-content/E:\\WPTest\\www.2\\wp-content\\themes\\bonestheme/library/translation/default.po'
When debugging that function I see that the first time it is called with a $path of "themes/bonestheme" it is ok, however the next call that asks for "E:\WPTest\wp-content\themes\bonestheme/library/translation/default.po" fails as it returns the $realpath as seen above in the error message.
Obviously this is run localhost on a Windows machine (PHP ver 5.3.24).
Thanks for your time.