Now fixed by purging the apt-file package! Big thanks to pabs on IRC #debian-apt for this solution.
Note: You need to purge the package to make sure the config file apt-file supplies is removed to fix this problem (remove is *NOT* enough) Apparently apt-file no works by using apt-get to install the Contents target for that file. This can be configure as described in /usr/share/doc/apt-file/README.md.gz for certain repositories via a line like: [target-=Contents-deb] $MIRROR/debian unstable main ...
