RE: one application can have only one Web config file ...
An asp.net application is a virtual directory that you make on a web server. This application will take the settings of machine.config file if a web.config file is not available in that directory. Now if you create a sub directory inside a virtual directory and place another web.config file in the sub directory then the sub directory will take the settings of the web.config file in that particular directory.
So my answer is that an application can have more than one web.config file but they should be in different directories of that web application and also the sub directory that uses it should be a virtual directory
RE: one application can have only one Web config file - true or false
Depends.... but answer is false because we can have more than one web.config files for an application. web.config file is unqiue for folder. one application can contain many folders so one application can contain many web.config files.
RE: one application can have only one Web config file - true or false
Actually it is False.If your web application has a well defined folder structure you can have as many web.configs as that of your flode structure.Lets Say For Example The Admin Folder in the application Can contain a web.config with all settings for the admin Role. If you have members you can have members folders with all the settings related to Members in another web.config
RE: one application can have only one Web config file - true or false
We can use more than one web.config file to meet the different security and other configuration requirements of different directories and in any case web.config file of subdirectory will take the precedence over file of root directory.