The app.exe.config file is only needed when you have both .NET 1.0 and 2.0 installed together on your device or desktop.
B4PPC and its compiled exes are fundamentally .NET 1.0 apps and will run under .NET 1.0 by default if it is available. This is fine for most of the B4PPC libraries - which are .NET 1.0 also. However there are some libraries that only work under .NET 2.0 and for these to load B4PPC and its compiled exes need to run under .NET 2.0 and not .NET 1.0. The config.exe program forces .NET 2.0 operation rather than the default .NET 1.0. This is OK for .NET 1.0 libraries as they are compatible with .NET 2.0. Also there are some performance advantages to running a .NET 1.0 app under .NET 2.0 due to improvements in the later .NET Framework.
If you only have .NET 1.0 installed you cannot use the .NET 2.0 libraries and don';t need a app.exe.config.
If you only have .NET 2.0 (or 3.0 or 3.5) installed you don't need the app.exe.config - but somebody running your compiled app might if you use one of the .NET 2.0 dependant libraries.