either single-{custom}.php 404's OR /taxonomy/ 404's - custom post type and taxonomy permalinks

I've been playing around with custom post types and taxonomies and banging my head off walls on numerous occasions now - I believe I've read every forum on the internet on how to solve various issues and I'm close with no cigar.

I've reset permalinks, added flush_rewrite_rules(); and all the rest

I can get the taxonomy to work e.g. domainname.com/products/audio-products BUT then the single-{custom}.php 404's

A slug of 'products' , '%product_cat%' or the one used in the code below will work:

register_taxonomy('product_cat',array('product'), array(  
    'hierarchical' => true,  
    'labels' => $labels,
'rewrite' => array( 'slug' => 'products/%product_cat%','with_front' =>FALSE, 'hierarchical' => true ),
    'query_var' => true,  
    'show_ui' => true  
 ));  

 add_action( 'init', 'build_taxonomies', 0 );  

OR

I can get the single-{custom}.php to display but then domainname.com/products/audio-products will 404!!

register_taxonomy('product_cat',array('product'), array(  
    'hierarchical' => true,  
    'labels' => $labels,
    'rewrite' => array( 'slug' => 'pcat','with_front' => FALSE, 'hierarchical' => true ),
    'query_var' => true,  
    'show_ui' => true  
 ));  

 add_action( 'init', 'build_taxonomies', 0 );  

Here is my full code:

$labels = array(  
    'name' => _x( 'Product Categories', 'taxonomy general name' ),  
    'singular_name' => _x( 'Product Category', 'taxonomy singular name' ),  
    'search_items' =>  __( 'Search Product Categories' ),  
    'all_items' => __( 'All Product Categories' ),  
    'parent_item' => __( 'Parent Category' ),  
    'parent_item_colon' => __( 'Parent Category:' ),  
    'edit_item' => __( 'Edit Product Category' ),  
    'update_item' => __( 'Update Product Category' ),  
    'add_new_item' => __( 'Add Product Category' ),  
    'new_item_name' => __( 'New Product Category' ),  
    'menu_name' => __( 'Product Categories' )  
  );      

register_taxonomy('product_cat',array('product'), array(  
    'hierarchical' => true,  
    'labels' => $labels,
    'rewrite' => array( 'slug' => 'products/%product_cat%','with_front' => FALSE, 'hierarchical' => true ),
    'query_var' => true,  
    'show_ui' => true  
 ));  

 add_action( 'init', 'build_taxonomies', 0 );  


function build_taxonomies() {  
register_taxonomy( 
'brands', 
array( 'product','post' ), 
array( 
'hierarchical' => true, 
'labels' => array(
            'name' => 'Brands',
            'singular_name' => 'Brand',
            'update_item' => 'Edit Brand',
            'add_new_item' => 'New Brand',
            'view_item' => 'View Brand',
            'search_items' => 'Search Brand'
        ), 
'query_var' => true, 
'rewrite' => array( 'slug' => 'brands','with_front' => FALSE, 'hierarchical' => true ), ) );  
}  


add_action('init', 'create_post_type');

function create_post_type() {
    register_post_type('product', array(
        'labels' => array(
            'name' => 'Products',
            'singular_name' => 'Product',
            'add_new' => 'Add new product',
            'edit_item' => 'Edit product',
            'new_item' => 'New product',
            'view_item' => 'View product',
            'search_items' => 'Search products',
            'not_found' => 'No products found',
            'not_found_in_trash' => 'No products found in Trash'
        ),

        'public' => true,
        'publicly_queryable' => true,
        'show_ui' => true,
        'has_archive' => true,
        'query_var' => true,
        'rewrite' => array( 'slug' => 'products','with_front' => FALSE),
        'capability_type' => 'post',
        'hierarchical' => false,
        'supports' => array(
            'title',
            'editor',
            'custom-fields',
            'thumbnail',
            'excerpt'
        ),
        'menu_position' => 5,
        'taxonomies' => array('post_tag', 'product_cat' , 'brands') // this is IMPORTANT
    ));
    flush_rewrite_rules();
}


add_filter( 'pre_get_posts', 'my_get_posts' );


function my_get_posts( $query ) {

if ( is_home() && $query->is_main_query() )
    $query->set( 'post_type', array( 'post', 'page', 'product' ) );

return $query;
}