Is it possible when pausing an activity to have a stopwatch recording the pause period. I mean this would be useful when monitoring the rest between 2 tracks

Do you mean you literally want the pause period to be recorded to the activity, so you can see it when viewed on GC? Because that's impossible. The best you can do is press Lap when you want to rest, instead of Start/Stop. Or you could create a multisport activity.

If you just want a data field that displays the time of the current pause period without recording anything, download my free Connect IQ data field AppBuilder, and use the following settings:

Formula: elapsedtime - max(elapsedtime)
Display Format: Time

If you set up a workout with a recovery step with 'Duration: Lap Button Press' it will record this time as a lap in GC and will show the time on the watch on the workout screen.

Including pauses/recovery into a workout isn't very practical, because it will ruin your avg. pace, and mess with FirstBeats algorithms should you use them.

Simply use the 935's stop watch or countdown function. No need for an activity when on a track since you don't use GPS anyway.

I thought that FirstBeat’s VO2Max algorithm purposely excludes junk data like when you’re standing still. At least that’s what their white paper claims.

Personally I always include pauses/recovery in my manual workouts because I want to be able to look back and see things like how long I rested and how my HR recovered. That way I can do the same workout without adding the rest time in the notes. It’s just anecdotal, but my VO2Max doesn’t usually go down after a decent workout (with pauses/recovery), so hopefully their algorithm works properly.

I know that a lot of ppl like to pause their watch during recovery if only to make their Strava activity look more impressive....

• Some ppl, like me, still like to record their rep time on an indoor track. I like to keep an accurate record of all my runs. Others record every activity so they can share on Strava. Another reason is to track your weekly mileage as accurately as possible 
• You can get decent indoor pace with a well-calibrated footpod
• OP could be referring to an outdoor track

Having said that, the 935 stopwatch can record an activity too, so it’s a decent option for indoor track work if you don’t care about instant pace. 

If I pause my watch during a run I can see distance, ave pace and duration on scroll.  I would like to be able to see a clock or timer for the duration of the pause.   Eg, today I did 400m uphill @10k pace, 45 sec rest, downhilll 400m @MP with 90 seconds rest.  I can build the 90 second rest into the activity and do an 800 m interval and just pause at the top, guess the duration and carry on back down, however, it would be great to be able to time that pause at the top.

The other issue is with my 90sec rest even though I have auto pause set to yes on my watch it still counts that time as movement and it affects the overall pace of the run on GC and Strava.  I have to go into the detail on GC to see the details for each lap.  Each lap is roughly at a 5 min km pace but the standing still recovery time adds into the overall ave pace which comes out as 6.28.  If I could just pause the activity and see a timer for 90 sec that would work better.

I have been creating workouts on GC and sending them to my watch but it can get lengthy for stuff like the above and also the 645 music won't let me create a rest period by time and will only record distance so on other workouts I put something arbitrary in like 100 m rest and then just hit manual pause which again affects my overall pace for the activity.  Is there a better way to do all of this? 

That's what the Interval function is for. You will get an extra box at the bottom of your activity in GC that gives you an overview of your interval work without the rest periods. Also, TP and runalyze let you look at just the work portion of your workout.