After an afternoon of testing we have been able to get DSI screen working on a special build of Volumio.
It is related to the kernel. Working with Linux volumio 6.6.47-v8+ .
No magic overlays, just display_auto_detect=1 
Volumio is working on a release to update the kernel. This is a time consuming exercise, as it involves an update on all plugins that make use of i2C and/or GPIO.
Also see this post for info.