Step 4 - VCDS coding:
Enter control module CAN Gateway, click Installation List and check the box for 55 Headlight Range. This will tell the car you have level sensors and a range control module installed.
Enter control module Cent. Electrics, go to byte 14 and check bit 4 "Bi-xenon headlights (without shutter) installed". If you don't see this checkbox in your VCDS (it wasn't there for me), do it manually in the binary coding by changing the fifth digit from the right from a 0 to a 1
Enter control module Headlight Range, click on Coding, enter 1507610 and click Go. This should automatically re-code the AFS slaves too.
Go to Basic Setting, select Group 01 and click Go. Align the headlights using the manual adjustment screws on top of each headlamp unit.
Check for any stored fault codes (there shouldn't be any) and clear if so.
Once there are no fault codes left, exit VCDS and cycle the ignition. You are now ready to test if everything works.
Step 5 - testing:
Every time you start the engine, the headlight motors will perform a self-test routine where the vertical motors will go to their lowest level, the horizontal motors will go to their farthest outwards and back in, and then the vertical motors will return to the correct height.
You should also have some new options in maxidot:
Under "Assistants" there will be an option to turn Bend Lighting on and off
Under "Setup" and then "Lights & Vision" there will be an option to turn Travel Mode on and off.
Go for a drive! Once moving, you should notice the headlights will move laterally with the steering.
Step 6 - bonus round if you have auto wipers!
Try changing the Headlight Range coding to 1311190 - this should unlock AFS II functionality, which the mk2 Octavia was never sold with in the UK. You will need to perform the Basic Setting again after changing the coding!
With AFS II, you should also notice that at speeds under ~30mph, the offside headlight will be quite low and pointing quite far outwards. Once you go over ~30mph, you will see it move back towards the centre and slightly upwards. This is the AFS II transitioning from "city light" to "country light". The beam shape will also change slightly at higher speeds (such as on the motorway) where the level of both lights will adjust slightly upwards to extend the range of the lights. There is also a different beam shape that will activate when the rain sensor detects rain.
Congratulations - you now have completely safe and legal retrofitted xenon headlights which will pass MOT!
Ps. massive thanks to @langers2k for the immense amount of help he gave me at almost every step of the way, including doing the adaptations to my wiring loom as I am colourblind and had trouble with it! I'm certain I would not have been successful with this conversion without all of his advice