> Anyway I am getting the "Target file does not exist, defaulting 
> to previous"

Doesn't matter, ignore it.

>  I ... tried to set  PHOENIX_SECURE=false

Quite probably not related to your question.

> The real problem to me is that the config.xml file is not in the
> app\james\conf directory after startup

its in apps/james/SAR-INF 

:-)

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