no, no, no.
let's try again.
1. please put your xcart version into your forum signature:
http://forum.x-cart.com/profile.php?do=editsignature
2a. Xcart does not know where your "store root" is, and by default makes an /xcart/ directory. This is only for initial installation -- you should really move your store to root, but that is beyond the scope of this post -- there are countless threads about moving your store to root.
2b. Now that you know where your store root is, when xcart says to "add the file into the xcart directory" -- it is wherever your store is installed. This is the same directory as config.php
Got it now?