I haven't played this game in some time. But finally had a go at setting up my config again.
Seems this is still an issue (now on windows 10 64bit with Documents over a network share. Network share is on Linux using samba if you were unable to recreate the issue by setting your Documents to a normal Windows share).
I did use Craigorsarus' suggestion which helped. I copied my old config files over but they would not update when I changed settings in game. So I started with a blank folder using -profiles= launch parameter and then copied the contents of the old config file over the contents of the new one and then set it up from there.
The fact that copying over the old configs seemed to show a similar issue (couldn't save to that file, however over the network it doesn't read from the file either) suggests it potentially has something to do with a samba share as opposed to just a windows share? I would guess if this is the case it would be permissions related.
Overall, if configs were saved in steam's standard config locations in your steam directory and not in a users Documents folder this issue would not exist.