It was pointed out to me that the generated file may simply be wrong in FORMAT.
So I checked it in detail.
It did contain all the same content as my old proftpd.conf file, BUT, it was out of order and had numerous extra closing tags which was causing the problem.
I'm not sure how to fix this in /templates-custom dir, so I'm just going to keep a copy of this proftpd.conf file I've corrected and copy it over if my e-smith server ever needs a reboot....
Could Charlie or someone from e-smith reply just to let me know this bug is going to be fixed??
Thanks!
Matt