> generates +/- 0-8v spikes on the power ......

Andrew, Vdd flicks between Vdd+8 and Vdd-8 ?

I've not had it quite that bad but have had troubles with a PIC
right next to relays. Some things you may have to resort to -

Enclosing the PIC in a grounded metal shield

Ferrite beads on I/O wires and using shielded cable

RC + Zener after the regulator

Schottky diodes (a to Vss, k to pin), to catch sub-Vss spikes

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