Custom Config file ignores the defaultconfig file

So, DefautlMySettings.ini is packaged to .pak file in

<YourGameProject>\Saved\StagedBuilds\WindowsNoEditor\<ProjectName>\Content\Paks

But it’s still not able to merge config file?

As a last resort, You should be able to call UObject::LoadConfig(…) and manually specific the path to config file.
There is also UObject::GetDefaultConfigFilename(…)