US VWP interruption and return from Canada

First, some terminology. ESTA is permission to get on a plane. It needs to be renewed every two years. It doesn't get you into the US. What gets you into the US is the Visa Waiver Program (VWP). All the 90 days limits you are talking about apply to the VWP, not the ESTA. People often talk about "being admitted on an ESTA" but they are wrong. Googleing "Visa Waiver Program" or "VWP" instead of ESTA will probably get you much better information.

VWP allows you to enter the US for up to 90 days. You are correct in saying that the 90 day count does not stop when you go to Canada (or Mexico). That theoretically means your VWP period expires while you are outside the US.

However the purpose of keeping the clock running is to prevent people doing 'visa runs' to Canada and then coming back immediately for another 90 days. You can be re-admitted for another 90 days with a new VWP, at the discretion of the border officer. Having been outside the US for 40 days (and being British) it's extremely likely that you will be re-admitted. If it had been only one or two days you probably wouldn't. You will need to stop at the border and go into the office. You may have to fill in a paper I94 form, get fingerprinted and pay a small amount of money. You also need to be sure that your departure from the US has been recorded. Stop at the border and make sure it happens.

You have an extra issue, which is convincing the border guard at your first entry that you will leave the US before your first 90 days are up, especially since having a return flight more than 90 days away is a cause for suspicion. I would be very clear about your itinerary, and ideally have some bookings in Canada, or other evidence that you will be there at the time you say.

First, I will correct some of your terminology here: The "ESTA" is the authorization that allows you to travel by air or sea (but not needed by land) to the US to seek entry on the Visa Waiver Program (VWP), and is valid for 2 years from when you get it. It has nothing to do with how long you can stay in the US on the VWP. The 90 days is the period you are admitted for under the VWP.

When you leave the US after a visit on VWP and return to the US on VWP after only going to Canada or Mexico (and you are not a resident of Canada or Mexico), you will generally not be admitted for a new 90-day period; rather, you will be admitted until the same date you were admitted until on your previous VWP entry. In other words, yes, a 90-day "clock" that governs your current and subsequent stays on the VWP continues to run down when you are in Canada, and the "clock" does not reset unless you go beyond Canada or Mexico.

Since you are not going beyond Canada or Mexico in between your two VWP stays, the period between when you are initially admitted for your first stay until you leave at the end of your second stay must fit into a 90-day period, and it doesn't. That's a problem.

The officer might use their discretion to give you a new 90-day period of stay if it is clear that you are not trying to abuse the VWP period (e.g. if your first stay was just a transit for one day), but I am not sure they will do so in your case, where the first stay was already long. To be safe, you should get a B2 visitor visa.

Q1) Will our initial 90 day allowance expire when we are 'logged out' by US immigration, if not, does it matter? If our entry into the US expires whilst we are in Canada, is there any process for a UK citizen to apply for some sort of visa that would guarantee entry into the US for another 25 days or so?

You won't even see a US immigration officer, but you can print the result page of this search, hand it in to the Canadian officer and ask them to pass on to the US the fact that you departed. You should do this because your 90-day admission period expires whilst you're in Canada, meaning your re-entry will be classed as a fresh admission rather than a continuation of your previous one.

Q2) After spending approx 40 days in Canada (therefore 100 days after we originally entered the US), will we be able to simply apply for re-entry into the US at an overland crossing from Canada (and will the initial ESTA entry in February have any bearing)? We will then spend approx 25 more days in the US, heading back to Colorado to sell the RV and fly back to UK around mid June 2018.

If the 90 days hadn't been used up, the officer could choose to admit you for continuation of your previous admission, in which case you'd have to leave by the end of the original admission period, or issue a fresh 90-day admission period. However, since your previous admission period will have expired, the latter is invariably what will happen provided you're admitted, which shouldn't be a problem especially if you can prove your plans to return home.

https://help.cbp.gov/app/answers/detail/a_id/1132/~/citizen-of-visa-waiver-country%2C-wants-to-drive-into-u.s.-from-canada-or-mexico%2C

According to this, you simply need to complete the paper I-94W form when you enter the United States from Canada.

You may want to call the port that you intend to use in advance, to verify that this is the case. I'm not certain if your having entered the US under the VWP before entering Canada changes this, although it doesn't appear so.