Somewhere in the docs* I read that if you include the /c=foo.ini or /c=.\foo.ini in the command line without specifying an absolute path then that config file is created in the CURRENT directory.
Doing this from the windows terminal (thus I am very confident of my current directory) it creates this file in c:\users\<username>\AppData\Roaming
This is really a non-standard location for this to be created. (I note that after extensive searching I finally found the .Stopwatch.ini default config file that is used when you don't specify anything via /c switch - I found it here in this directory as well.)
The .Stopwatch.ini default config file should be in a folder in this directory named XNoteStopwatch or Stopwatch or something like that.
And if I specify /c=foo.ini or especially /c=.\foo.ini it should DEFINITELY go in the current directory rather than over in AppData/Roaming.
* on the page http://www.xnotestopwatch.com/help/command_line.htm it says "Unless you specify full path to these files the current directory is used."