Have you tried to manually create a Published Parameter of the type 'Scripted (Python)' and than to link it to your reader?

@lars_de_vries: In my case I do not need it for a reader database name or password, but for a job submitter like here:

The variable $(SERVER_CONNECTION) is the one that should be scriptable.

If you want to use a scripted parameter in combination with a config file, I would recommend the following:

FME Workbench:

1. Create a subdirectory in the directory where your .fmw file is located. Call this subdirectory 'config'.
2. Create a new file __init__.py in the config directory.
3. Put the configuration parameters you need in the __init__.py file as key value pairs:

host_dev=http://fme-dev.com/
user_dev=admin
password_dev=admin


host_prod=http://fme-prod.com/
user_prod=admin
password_prod=admin

1. In your FME Workspace, create a new Scripted (Python) parameter for each property from your config you need. Return the required value like this (host_dev in this case):

import config as conf
return conf.host_dev	

FME Server:

To be able to use your config file, you will need to upload the config to your FME Servers:

Upload the config-directory and the __init__.py file to resources/Engine/Plugins/python/python27

The result will be a 'config' directory inside the python27 directory.

With that done, your scripted parameters will read the config uploaded to the FME Server.