Don't worry about the xampp
folder inside of the htdocs
folder, or anything inside of it.
It "broke" because you used a wrong entry for your virtualhost DocumentRoot.
Here is what you need to do to get things working, step-by-step:
Assuming xampp is in a working condition again [you removed the code that broke it from httpd-vhosts.conf],
1. your host
file looks fine , although, I would probably add another line for localhost
because I've seen where Win7 doesn't "know" what localhost means without it.
2. replace all the code you put in the httpd-vhosts.conf
file with the following:
NameVirtualHost *:80 # needed for name-based virtualhosts
<VirtualHost *:80> # will make it work with only port 80
DirectoryIndex index.php index.html info.php
# allow access by default
3. create a new folder under "E:\xampp" called vhosts
4. inside the new folder "vhosts", create a new folder called otuatail.co.uk
5. inside the new folder "otuatail.co.uk", create a file called info.php
6. inside this new file "info.php", place the following code
<?php phpinfo(); ?>
and save that file.
7. start up the xampp control center and start apache2...if apache2 was already running, stop it and then restart it again [for the changes to take place ]
8. open a browser, and goto otuatail.co.uk or www.otuatail.co.uk, if everything went correctly, you should see a webpage showing your version of PHP with all of its settings.
9. if you still get the "forbidden" message [which you should not], try using "http://www.otuatail.co.uk/info.php" in the browser.
10. if things still don't work correctly, you may need to place another "default" VirtualHost entry pointing to the htdocs folder above the existing VirtualHost directive. If thats the case, I can show you what to put for it....but, try all of the above first.