Both of your suggestions was what I was trying. Anyway I figured it out.
There were two problems, first problem was the config file I was using wasnt complete, so I just downloaded the commented config.
The second problem was my -mod= line had a typo in it, so the modded config file wasnt even being read
Anyway, now that it works firefights are much more engaging now. I realise the problem is due to lack of cover and concealment (read my first post) and AI, however AI can easily fixed by minor scripting and use of correct waypoints (for example, using guard waypoints instead of move so the AI sits tight and engages an enemy instead moving towards the enemy any dying. It is best to set the waypoints within about 100m of each other to get realistic engagements, only allow one group to move forward if they are performing a flanking manouver or the engaged enemy has been eliminated).
I also tweaked all weapons to have a higher dispersion as they are far too accurate IMO, MG's have a much higher laterial spread and dispersion now so they tend to 'surpress' (although the AI has no concept of surpression).
One further tweak I made was so that normal infantry is twice as visable so the AI can spot infantry earlier, engage them at longer distances, and generally have more realistic firefights.
These effects combined with the CoC Command Engine are now amazingly fun. You can now experiance long engaging company level battles (if your PC can handle it) that can last for hours, as they would in real life.
Im not really interested in multiplayer OFP - I mainly make missions for myself.
Multiplayer OFP has great potential but it is ruined by a client side netcode which ruins the game if High ping players and Low ping players are in the same game.
Also the vast majority of OFP online is capture the flag, squad based tactics are rare, and if you put it up against other Multiplayer games of its genre such as BF1942 or Americas Army, it fails to deliver.
OFP's true glory lies in it's single player IMO where you can minic to a small degree real tactics and Company level (and below) Land warfare.
Oh, and on the rare occasion I do get into a multiplayer game where people dont kick me for my 'high' ping
I'm usually booted after a while due to 'fade', despite having a completely legal copy of the game with legal CDkeys.