Google it Ray. The coil around the steering lock barrel induces a current in the chip and asks the chip to identify itself. The chip provides a code which disarms the immobiliser.
The immobiliser remains off until the key is removed and after about twenty seconds it re-arms.
Fancier chips also receive a new code each time they are used but I don't think this happens with the Ford system.
Anyway better news. I spent the morning messing with the cowl. The original key works every time with the cowl removed and the sensor ring closer.
I've re-wrapped the lock barrel, this time with leather. I've also ground away the plastic from the inside of the cowl around the lock hole to get the sensor ring as close to the key as possible. It took three fits to get an acceptable look but its back on. Since then its worked every time. Only time will tell if that's it.