I think that I finally solved this issue last night. Here is what I did, for other lost souls who encounter the same problem.
The Config file should NOT be created in the deploymeny directory alongside the manifest file. I created it in the top level directory for that project.
next the config file needed edited in TWO places.
<ConfiguredValue>DataSource =IPAddress;UserID=SmithJ;Password=ABC123...</Configuration
Configuration ConfiguredType="Property" Path="\Package.Connections[IPAddress.Database.Login].Properties[Password]"ValueTupe ="String>
ConfiguredValue>Add Password Here</ConfiguredValue>
These things may appear obvious to "old hands" but it is surprising that full details are so rarely included in replies to requests for help. I kept coming up with comments like "edit the config file", which is great if you know where/how to edit it! 🙂
Anyway, hope that this is a help to others.
Colin