Thank you both for your replies. The regional settings on the server
are plain vanilla United States/ English with all the nromal currency
symbols, etc. Nothing special there. The source data really, truly is
the 50.9 and 371.4 in the source table in SQL Server. The values
perform as exepcted in all other respects within SQL Server and in
other extracts (e.g. into Excel).

Updating the mergefield after making the formatting changes also
doesn't have an impact, including with the two variations Graham
suggested.

I'm wondering if it's a quirk with a "money" datatype within SQL
Server. I haven't see any reports of this being a problem, but it is
the only thing even vageuly unusual about this sitaution. We have
dozens of other mail merge documents, all of which work well but no
other of which have 'money' field as a datasource. Does this make sense
at all?