Hi Jim,
You're right about the Royal Sachsen (Saxon) connection.
The House of Windsor came into being in 1917, when the British government was worried by the anti-German feelings and the name was adopted as the British Royal Family's official name by a proclamation of King George V, replacing the historic name of Saxe-Coburg-Gotha. It remains the family name of the current Royal Family. The surname 'Windsor' was chosen because that was the name of the house they were living in:-) It's a peculiar anomally that immigrants of 5 years are known as 'British' yet the royal family is stilled called 'German' by some!
As regards Princes Diana's aunt, that would be the eccentric 'she' of the fluffy pink dress, fluffy blonde hair and fluffy white lapdog; Barbara Cartland the prolific romantic novelist - I didn't hear her reference to the Queen being a German, but it sounds about right. After a long run, she's gone to her maker.
Rena