This still leaves one issue unresolved. I found the midi recording modes (in transport bar) and set to Merge. This cures the problem of it creating new parts in the Key Editor in record.
BUT - I would still like to create new parts when recording in the Project window. In Cubase 8, I had this set to New Parts and Merge - enabling merging in Key Editor and New Parts in Project window.
Cubase 9.5 seemingly will not allow this. Am I correct?.. shall I go f*** myself now?
BTW pilot errors aside, Cubase 9.5 is probably the best release to date.