Hi new to bike building so need some help please. Project is a Peugeot 531 P frame and sourcing appropriate components. Got 48 T / 36 T chainrings a 6 speed freewheel 12 T - 17 T, rear mech is a simplex SX610 which seems to working ok. The chain tension is correct when on the big chainring but way too slack when on the small ring. Is the rear mech not working properly or is it not compatible with the gearing I've got ? Any advice appreciated.

You have a 12 t difference up front, a bit large, but not unprecedented.
Very close out back.
My guess assuming that the rear derailleur mount is aligned… is that you could remove some length of chain, the goal to get the upper jockey wheel closer to the cogs while still allowing the 48-17 and 36-12 to have reasonable capacity. I would gamble and take out three links of chain.

I think that's more or less right. You'd probably be happier with the wider gearing range you'd get from a 14-28 freewheel, which I believe that derailleur and chainring combination should handle. Whatever you use for a freewheel, make sure that the chain is long enough to work in the big-big combination (48-28 if you switch to a bigger freewheel, or 48-17 in your current setup). That's not a gearing combination you'd ordinarily use, but you will sometimes shift into it accidentally. If the chain is too short for that shift to happen, it will break something and possibly cause a crash

The SX 610 will not work properly if it is not mounted properly and it's easy to mount it improperly.

Can you first make any chain tension correction by moving the axle in the dropouts?

A picture or two might shed light on a possible derailer spring preload problem, as Simplex mech's often come up damaged in this way.

Some riders find the big-big sprocket combination extremely useful, but even if not there should be enough chain length to easily and quickly shift to and from the largest cog while in the big ring.