paste the deploy job log file here.
It should overwrite read only files.
Thanks Reg Smith for pointing this known Issue doc
A Read-only configuration file causes a BLDeploy failure, even with the Overwrite read-only filesoption selected. The Deploy Job option Overwrite read-only files is an option only for copying a file onto a target with an existing file that is currently read-only. The option does not affect any asset type other than the file asset and the copying of the entire file.
For example, if there is a change to a configuration file and the configuration file asset is used, the override option does not attempt to alter the file state to allow configuration file updating and editing. However, if the entire configuration file was packaged as a file asset, then the file to be copied onto the target and the read-only option are temporarily changed, assuming that the user and role being deployed have appropriate permissions.
if this is a windows target you can add external commands to do the attr -/+R before and after the cfo in the blpackage.
Yes, we added a external command chmod as it's a linux target.