What do you see as the options?
Config files should be on the classpath, unless they need to be trivially modifiable. If they do, then they should be in a location external to the app, and the location set by either default, a JNDI string, a system property, or whatever.
Files that are regularly updated as part of system operation must be external, and configured in the same way. Although I'd question whether or not it makes sense to do that kind of persistence with a file.