Hi Koen,
I couldn't find any configuration warnings as I was running it via SQL Server Agent job and the package was running without any issue in my local machine.
However, I used below workaround and I was able to get pass this issue:
Created a UserVariable to hold the connection string value through Expresssion.
In package config file, instead of using Package.Connection I used package.variables and referred to above mentioned variable:
<Configuration ConfiguredType="Property" Path="\Package.Variables[User::XXXXX_ConnStr].Properties[ConnectionString]" ValueType="String">
<ConfiguredValue>
Data Source=XXXXX;Initial Catalog=XXXXX;Provider=SQLNCLI10.1;Integrated Security=SSPI;Auto Translate=False;Application Name=SSIS-XXXXX;
</ConfiguredValue>
Hopefully this would help anyone who faces similar issue in future.
Regards,
Maninder Kumar