6 year time limit - only accounts upgraded within last 6 yrs have reason to complain? I was told I had to upgrade in order to get an overdraft 17 yrs ago so therefore have no right to complain?
Yes. Correct. There is a six year time bar because the assumption is that if you thought it was something to complain about you'd complain about it within six years of it happening. FOS ask the bank if they will waive this; chances are that without any extenuating circumstances (REALLY serious ones, not just "I didn't realise I could") then they will refuse, as is their right.
3 year time limit - the letter states that I am complaining more than 3 yrs after realising (or should have realised) that there was a problem. Surely the date of my initial correspondence would be taken as when I realised? How have they concluded that I realised more than 3 yrs ago?
It's whether you should have realised there was a problem. If you felt that the insurance was unsuitable for you and as such the bank had sold it to you wrongly then the expectation is that you would (or should) have dealt with this in the three years after you've realised. Here you are complaining seventeen years (!) after something was sold and saying you have only just realised that it was wrong to do so. That is a bit extreme.
In your case it is irrelevant because the sale you're talking about happened well over six years ago and it is time barred in any event.
I queried, in branch, my need for the account as I had never used nor needed anything it came with other than an overdraft. I was told I had to clear the OD before downgrading. Was this query recorded in any way and attached to my account?
Probably not. Branch conversations aren't recorded so it is your word against the bank's, and in any event information about a sale that happened in 2000 probably no longer exists as it was so long ago. So even if it wasn't time barred, and it thoroughly is, then your complaint is very unlikely to be upheld.
You may have a complaint if you asked to downgrade and were refused for an invalid reason (and without knowing any further details, that sounds invalid), if that happened less than three years ago. But that doesn't speak to any mis-sale and the original sale of the account is well and truly time barred.