I suspect the error wasn't your fault: there's probably a security issue with phpbb itself. Unfortunately any vulnerabilities like that seem to get exploited pretty quickly. All you can do is keep things up to date and hope for the best.
Thanks for the thought mr_e but unfortunately it was my error. I did not know I had to change the CHMOD permissions on the config.php file following the installation of the software! Doh!
On a plus side, I know now and will not make the same mistake again. Personally I am embarrassed to be subject to such a stupid hack - it was clumsy and very poor. Which equates to being outwitted by a stumbling nit!