The user configs moved from $HOME/emc2 to $HOME/linuxcnc, so you should probably rename your directory, or move your files to the new place.
The hostmot2 watchdog in LinuxCNC 2.5 does not start running until the HAL threads start running. This means it now tolerates a timeout on the order of the servo thread period, instead of requiring a timeout that's on the order of the time between loading the driver and starting the HAL threads. This typically means a few milliseconds (a few times the servo thread period) instead of many hundreds of milliseconds. The default has been lowered from 1 second to 5 milliseconds. You generally don't need to set the hm2 watchdog timeout any more, unless you've changed your servo thread period.