The file name was incorrect, so it was having no effect. Also, the sandbox environment that this was supposed to be ignoring is deprecated. Probably best to just drop it entirely.

This change was introduced in 3bb4e511, where it was marked as changed due to a typo. However, that is the correct name of this particular virtual environment. See https://hackage.haskell.org/package/virthualenv

The Stackage project provides a cabal.config which locks in a specific
package set.  This file should be shared between developers project so
that everyone is developing using the same versions of packages.

"GHC creates a subdirectory .hpc in the current directory, and puts HPC index (.mix) files in there..."

https://www.haskell.org/ghc/docs/7.4.2/html/users_guide/hpc.html

https://github.com/haskell/cabal/wiki/Package-Environments#sandbox-command