Hi Madmum, welcome to the forum.
The spotting sounds to me like a result of not keeping up with the Vagifem, as you experienced it on inserting the applicator. Your vaginal tissues have probably become more fragile over time, as twice a week with the 10 mcg pessaries is not enough for many women. The pessaries used to contain 25 mcg estradiol until a few years ago. Quite a lot of us need more than two a week. I suggest you use it every day for the next couple of weeks, then drop down to every other day. This ought to plump up the tissues. Perhaps you could use a vaginal moisturiser as well, if you don't already. Yes VM works a treat so perhaps Google the Yes website (far less frightening!). There are plenty of threads on here about VA, so have a good browse round.
Incidentally, having close relatives who have had breast cancer does not necessarily preclude your taking systemic HRT. However, others on here will know more about this than I do, if you want to consider using it again.
I despair of GPs, many seem to know sweet fanny adams about menopausal issues.
JP x