Not quite a direct answer, but did help me solve the problem, sort of :-)
The timeout, after further analysis was actually coming from "Apache" not from Mapserver, and certainly not from Map3D.
Basically, Map3D was still requesting the entire map, and Mapserver was generating it, but Apache was timing out and killing the Mapserver process after a couple of minutes, presumably because it had thought it had crashed.
After I changed the timeout value in my Apache web server configuration for the path that I had set up to call map server to produce the WMS, I managed to get it to work.
It's still not the best solution, because it takes Mapserver 31+ minutes to generate a 640x480 of the map.
Unfortunately after closing then re-opening my Map3D project, it sits and waits for over an Hour to actually load the project, while it waits for the map to be produced.
I solved the time-out, but still need to see if I can get Map3D to not ask for the whole map, and only the area in the Viewport, which is exactly what QGis does.
UPDATE - 3 Days Later
So, try as I might, I just cannot get Map3D to stop trying to load the entire map at startup, re-adding the layer, or in a lot of cases even on panning the map.
The only way Iv'e been able to reduce the footprint, is to change the map extents parameter in the map script definition file that map server uses to generate the file.
Making that smaller, did mean map3d requesting a smaller map, but unfortunately, it also meant that panning outside those boundaries just resulted in mapserver returning white space, as it believed there was no map data there.
In time, I might figure the Map3d side of things out (Sorry Jens, but the saving and altering of layer data as per your comment didn't work in this case, points for trying though :-) )
However, since the actual timeout was due to the configuration of the underlying web server, then technically the answer is to change the timeout under the web server configuration.
This will stop the error, but depending on how you configure it, you may have to wait a long time to load the map.
I'm marking this as the answer for now, but I have a feeling that this is not the end of my re-visiting this...