I have installed the latest Yamaha USB driver and the latest Yamaha Connect ( 1.0.6 ) and the latest MODX OS update.2.51.0

You May think it is trivial (but it’s not) saying you have the latest doesn’t tell the whole story. What if the latest driver is not the one for your particular piece of gear. You want the correct latest driver.

The actual name and number required. The MODX does not use the “Yamaha USB Driver“ (there actually is a Yamaha USB-MIDI Driver for other products) — Instead you want to download and install, specifically, the ”Yamaha Steinberg USB Driver version 2.0.3” for your particular computer type, Windows or Mac.

The actual name and number of current MODX CONNECT is version 1.1.0 (“Yamaha Connect ( 1.0.6 )” is not current. And is likely why you are getting the Error.

Oops my bad, I had the Yamaha Connect Version 1.1.0 installed when I first got the error msg. I saw the 1.0.6 in the downloads and mistook it for a newer version.
”Yamaha Steinberg USB Driver version 2.0.3” is the one I have installed.

EDIT:
I've reinstalled the correct Yamaha Steinberg USB Driver Version 2.0.3 and the latest Yamaha Connect V1.1.0
Now Connect is working in Cubase as it should.

thanks for your help.