Good question. The key file is DefaultSettings.xml. I did a search, hoping to find documentation about this (I couldn't) but I did see that I basically answered this question here and had forgotten about it!
I'll give some more details about this. The default layout and any other setting that is registered with the SettingsService is determined as follows:
1. AppSettings.xml file is searched for in a directory like this: C:\Users\rlittle\AppData\Roaming\CircuitEditor\3.0
If this file is found, the settings in it are highest priority.
2. Otherwise, DefaultSettings.xml is used to determine a setting's value. This file is by default in the same directory as your app's executable.
3. If the setting isn't in either of those files, the default value of the C# property is used.
Here are those properties in SettingsServiceBase:
/// <summary>
/// Gets or sets the file path where default settings data can be found; default data is used
/// when no persisted settings data can be found</summary>
/// <remarks>Path is initialized to Application.StartupPath\DefaultSettings.xml</remarks>
public string DefaultSettingsPath
/// <summary>
/// Gets or sets the file path where settings data should be persisted</summary>
/// <remarks>Path is initialized to Environment.SpecialFolder.ApplicationData\Application.ProductName\Version\AppSettings.xml</remarks>
public string SettingsPath
--Ron