The tickets purchased were for a specific mid morning train...
As stated in our Fares Guide, the internal railway policy is that "... there may be occasions where a passenger joins the correct train but at a later station, ..... Although this is not strictly in accordance with the rules for Advance tickets, the Rail industry has agreed that in such cases, no additional fare should be charged unless there is clear evidence of intent to try and avoid a higher fare..." it would not normally be the case that Newcastle to London is cheaper than York to London, though as you admit this was the case for you this is both puzzling for me (as you have not provided sufficient information for me to investigate this phenomenon) and problematical for you. But,
if you booked before York - London Advance fares went on sale, then I would argue that the last sentence quoted above really shouldn't apply in your case.
If you were treated as being in breach of the Break of Journey restriction in a manner that should be charged for then I see nothing in the Advance T&Cs to suggest that the charge should be anything other than that described in
NRCoC Condition 16, which would be "the difference between the price paid for the ticket you hold and the price of the lowest priced ticket(s) available at a ticket office for immediate travel that would have entitled you to start,.... your journey at [York] on the service(s) you have used", and the price of such a ticket during what both I and Virgin Trains East Coast call "mid morning" would be £96.80.
my seat was taken and when I asked the passenger if I could have my seat he became unhappy
Understandably so.
and went to find the inspector and the rest is history as explained.
Ah, I see. So you brought it on yourself.
However you were, as far as I can tell, overcharged and I am keen for you to obtain a refund of the additional charge and for the Guard to be given appropriate training regarding NRCoC Condition 16.
The ticket I was issued was a full fare anytime single from York to London, I was not offered any other option other than which class I wanted to pay for. No mention of excess fare or penalty fare.
That is not compliant with the NRCoC, so you have a case.