So, the fab people at Biketrax in Edinburgh have confirmed that the connection dropout during the updating of the system has indeed corrupted the the BIOS of the Shimano steps 8000 on the wee computer chip.
If I had realised that this was going to be such a risk I obviously would not have attempted it.
So here is the clear advice:
Get the updates done by a Shimano approved bike dealer through their hard wired connections. Don't do this stuff by bluetooth unless you want to risk the complete breakdown of the system.
Im now awaiting the bikeshop electro mechanic's communication with Shimano and their guidance through a possible re-installation of firmware.
Of course I will have to pay for their time, which is a waste of time since I could have simply got them to plug and play if I had known.
My suppliers (e-bikes direct) are brilliant, and are asking Merida for a replacement chip, hopefully under warranty... since I acted in good faith and this problem is unanticipated and not reasonably warned about.