Ok,I have to elaborate more :
You create a key container. There are machine-level and user-level containers
Specify a protected configuration provider (RsaProtectedConfigurationProvider or DataProtectionConfigurationProvider) which essentially is a class that you can use from your code.
Pass the provider your key container (in case of RSA,in case of DPAPI is simpler) and when saving the configuration file the <protectedData> sections
will be encrypted. The decryption key is not included in the configuaration file or the application.
e.g. in the case of DataProtectionConfigurationProvider the decryption key is auto-generated and saved in the Windows Local Security Authority.
When calling the application the .net framework will decrypt the connection string and makes it available to your application. You don't have to write any code to encrypt or decrypt.
Of cource if the memory of the application is compromised, the sensitive information might get compromised as well.
"How does it help to encrypt information in a config file that are afterwards transmitted in clear through the network, e.g. when connecting to a MySQL or FTP server?"
well the original question was "Where should I have configuration information in a file or database, on the basis of security and accessibility",did not ask anything about securely transmitting the connection string, but in case you are curious you might want to look at Secure connection to SQL Server from Perl DBI
in reply to Re^2: Where should I have configuration information in a file or database
in thread Where should I have configuration information in a file or database