The config files are described here:
http://svnbook.red-bean.com/en/1.7/svn.advanced.confarea.htmlThose settings are only local and don't go to the server.
But since you get the overlay on that file, that means it's already under version control. And that means the file can not be ignored through any config or property anymore.
You have to delete the file from version control, after that it can be ignored.