If you haven't found out by trying, here is what I found out:
Files which are specified under ApplicationResourceFile like so:
<ApplicationResourceFiles>
<ApplicationResourceFile Location="MyFiles\My.resx" />
</ApplicationResourceFile>
a) have to be located in a MyFiles folder within the .wsp cabinet and
b) will be deployed to a directory relative to the Virtual Server root directory, i.e. to C:\Inetpub\wwwroot\wss\VirtualDirectories\80\resources\MyFiles
Your .ddf for the cab file creation file would look like this:
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
.OPTION Explicit ; Generate errors
.Set CabinetNameTemplate=TestResources.wsp
.Set DiskDirectoryTemplate=CDROM
.Set CompressionType=MSZIP
.Set UniqueFiles=Off
.Set Cabinet=On
.Set DiskDirectory1=.
manifest.xml
.Set DestinationDir=MyFiles
My.resx
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
In order to deploy files to the C:\...\12\Resources folder (or to any other folder beneath the 12 hive), you need to use the RootFile element like so:
<RootFiles>
<RootFile Location="Resources\Test.resx" />
<RootFile Location="Resources\Test.de-DE.resx" />
</RootFiles>
In this case, you also have to assure that the folder ein your .wsp cabinet is the same folder which will be the relative folder in relation to the 12 folder.
Your .ddf for the cab file creation file would look like this:
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
.OPTION Explicit ; Generate errors
.Set CabinetNameTemplate=TestResources.wsp
.Set DiskDirectoryTemplate=CDROM
.Set CompressionType=MSZIP
.Set UniqueFiles=Off
.Set Cabinet=On
.Set DiskDirectory1=.
manifest.xml
.Set DestinationDir=Resources
Test.resx
Test.de-de.resx
;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;