West? Do you mean from central Nikko westwards into the Okunikko region? If yes, I agree. The best autumn colors in mid October will be in the Okunikko area and not down in central Nikko.

My question is that I have lots of time, my plan is to drive and spend a night or two at a onsen/ryokan on Lake Chuzenji and go up the road to Yudaki falls.

That sounds nice. But keep in mind that Nikko can get very crowded during the autumn leaf season, especially when the weather forecast is good and on weekends. I strongly recommend to make your trip to Nikko during the week. Avoid weekends and October 12, which is a national holiday. Even on weekdays, you better expect slow traffic around Nikko.

I would like to end my trip back in Tokyo to do some last minute shopping - so I have a few days on the road for sight seeing....any recommendation is highly appreciated.

From the bus timetable:
Narita #2 terminal bus stop - #1 bus stop - Utsunomiya station
8:10 - 8:15 - 11:00
9:40 - 9:45 - 12:30
It will be another 40 minutes' train ride from Utsunomiya on JR Nikko line to Nikko station.

OR, you can take Narita Express to Tokyo station, then change to Shinkansen to get to Utsunomiya (then Nikko line to Nikko).

If you want to see central Nikko, Lake Chuzenji area, Yudaki, etc., two days would be enough.

Narita is to the east of Tokyo, Nikko is to the north, and Hakone is to the west, so you have to go through Tokyo/Shinjuku to travel between Hakone and Nikko.

If you are traveling in Nikko and Okunikko (Yudaki area), then I do not recommend driving - the roads may be crowded, and you also have to worry about parking. If you take the bus, no worries about parking. I feel that (both Uji and) I were under the impression that you were going to drive west FROM Nikko to somewhere else, where there is no simple public transport access, but that does not seem to be the case.