SOLVED !!!

Ok...

BACKGROUND
1. Bought 2nd hand N900 and everything came as stock-standard with original pr1.2 Maemo.
2. Upgraded to pr1.3.
3. SD card not seen since I bought it
4. Tried "everything" I could find on maemo.org, talk, etc
5. Yes checked magnet (it already had it)
6. Yes, tested camera slider and camera hacks using gconfig
7. Yes, tried a stronger magnet with and without cover
8. Yes, tried different SD cards, including old 128meg ones
9. Yes, tried FAT32, FAT and even NTS formats

Nothing worked.

I even tried to force create the mmblk1* folders in /dev.

As you said - nothing!

Until I read this !!
http://talk.maemo.org/showthread.php?t=85658
and this ...
http://talk.maemo.org/showthread.php?t=94463
and this (this one solved it for me) ...
http://talk.maemo.org/archive/index.php/t-72675.html

SOLUTION
(at least for Kernel-Power users. There is also a CSSU solution, but could not find a .ko file replacement for the original pr1.3 version)

1. Upgrade or download up to the latest Kernel-Power (v53 as at this post)
2. Have rootsh
3. Make a copy of the existing /lib/modules/2.6.28.10-power53/omap_hsmmc.ko kernel file. I renamed it to omap_hsmmc_ko.BAK
4. Replace it with this ...
https://www.dropbox.com/s/v4mglc74ciypzog/omap_hsmmc.ko
(get it whilst the link is still live!)
5. Reboot and voila! Memory card is seen.

Sure.. the back cover sensor is the problem, but without having to take my phone apart to check, I think this is better anyway. I can use the phone with or without the back cover.