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I have few settings which I could place in a separate XML file and have them accessed in the Web app. Then I thought (thinking of one additional file to deploy), why not have them in the web.config itself. However, just because I need to have custom nodes, I can not have the settings under . So, I am thinking of creating a custom config handler following this. Would that be better than having a separate XML file? Is It going to be an overkill or performance wise? Is there a better way to go?

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From performance standpoint putting custom settings in web.config and creating a configuration handler will be OK because the config values are cached and read only once when the application starts. Putting the values in a separate XML file you will need to handle the caching your self if you want to avoid parsing it every time you need to access those values.

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One more benefit of keeping everything in web.config is that future developers will probably be more comfertable with it, since its likely a system they will have previous experience with.
Darin, what would be the difference If the application is a Windows service and If I have those settings in the App.config or the custom config handler? For me, the additional file problem remains.
The configuration system works the same no matter the type of application.

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