So I did a bit more testing, completely removing Lync as described in support.microsoft.com/.../2691870 and then downloading the Lync 2011 via Office 365 Settings.
First I just did the Lync 2011 install and tried to log in and it just sat there with the spinning wheel as in the original post. So then I did the update. After the update I am now back to the error that the server cannot be reached. Port 80 is not blocked and there isn't a Firewall issue on my side. Lync Web Scheduler works and I can sign into Lync from OWA.
This was working up until 14/08 evening. Lync went offline and I have not been able to log back in since.
Sorry for hi-jacking you post, Natalie but I was just curious if you were able to resolve your issue.
Thanks!