By pure fortuity I discovered that with a different configuration file it works (but I am not able to identify the differences). People reported the WinSXS folder cleanup not working while it works for me. More info here:[You must be registered and logged in to see this link.]
I suspect that winsxs folder cleanup and compression may be inter-related and one or other mat refuse to work under a particular unidentified setting.
Yes, I know that one option excludes the other and when both are selected, folder cleanup takes precedence. This has been the first thing I checked before reporting this bug.