Web.config transform not being performed in .NetCore 6 webapi service

Question

My dotNetCore 6 webapi webservice is hosted on an internal IIS webserver. The web.config has two transforms web.Debug.config and web.Release.config. The web.config is:

    <?xml version="1.0" encoding="utf-8"?>
<configuration>
  <location path="." inheritInChildApplications="false">
    <system.webServer>
      <handlers>
        <add name="aspNetCore" path="*" verb="*" modules="AspNetCoreModuleV2" resourceType="Unspecified" />
      </handlers>
      <aspNetCore processPath="bin\Debug\net6.0\SMARTapi.exe" arguments="" stdoutLogEnabled="false" hostingModel="InProcess">
        <environmentVariables>
          <environmentVariable name="ASPNETCORE_ENVIRONMENT" value="development" />
        </environmentVariables>
      </aspNetCore>
    </system.webServer>
  </location>
</configuration>

The web.Release.config is:

    <?xml version="1.0" encoding="utf-8"?>
<configuration xmlns:xdt="http://schemas.microsoft.com/XML-Document-Transform">
    <location>
        <system.webServer>
            <aspNetCore>
                <environmentVariables>
                    <environmentVariable name="ASPNETCORE_ENVIRONMENT" value="production" xdt:Transform="SetAttributes" xdt:Locator="Match(name)"/>
                </environmentVariables>
            </aspNetCore>
        </system.webServer>
    </location> 
</configuration>

When I Publish using the Release profile I do not get the transformed web.config. I get the three separate files web.config, web.Debug.config and web.Release.config. I suspect because of this I also get three appsettings files. These are appsettings.json, appsettings.development.json and appsettings.production.json. I think I should only be getting appsettings.json and appsettings.production.json or just the one which would be a combination of appsettings.json and appsettings.production.json.

Q: Why is my transform not working? and once transform is fixed will appsettings get fixed?