You could rename the file to something like app.config.template. The first time the developer does a get latest it will rename the file on their file system. If they then go into Explorer (in Windows) and copy the app.config.teamplate, calling it app.config - the file will not get overwritten from now on because the Team Foundation Server doesn't know about it.
Hope that helps - obviously you'll have to manually manage the case when new properties are added to the app.config.teamplate file...
M.
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