I'm the same... now. I've swapped the io0.in and io0.out with each other a few times over the past few days. Looks like this now:
my duet connection.JPG
And from the picture, I can confirm the PanelDue RXD (black wire in my photo, blue in yours) connects to the signal io0.In on the io0 connector.
paneldue.JPG
But I've solved it! I did two things and not sure if both were needed or only the second (I suspect only the second).
First - I had been using io_0 as an endstop and had it inverted. I thought maybe the inversion was lingering, so I sent an M950 to not invert the signal. I suspect this made no difference.
Second - RTFM I took a quick triple check of my M575 command against the documentation and noted that in my config.g (above), I have M575 P0 S1 B57600, and the documentation states clearly that it should be M575 P1 S1 B57600.
So a quick change a reboot and it's working! And so is the SDcard connected via the modified ribbon cable.
Thanks to @dc42 and @Phaedrux for your time and energy on this. I'll do penance by trying to help answer some other questions in the forum (I've made enough mistakes to learn a bit).
Mike