If you have the checkbox for "use .deploy file extension" checked, then it appends .deploy to all of the file names, and it doesn't come across as a .config file (which is the reason it does this). ClickOnce removes the file extension when putting it on the user's computer. I've just checked mine, and every file under application_files in the app.publish has .deploy appended to the file name.
Did you have that checkbox checked?
RobinDotNet
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