Architecture :: Why Website Is Stopping / Resetting

We are using a .net web application and my environment is as follows:-

SERVER : Server: Windows 2003
.NET FRAMEWORK : 3.5
ASP.NET FRAMEWORK : ASP.NET 2.0
Template used : ASP.NET Web application project ( not a web site)

I have code in global.asax.cs which is like below. This code dynamically loading the web.config. Is this right? Since the deployment accidentally the web.config been copied mutlitple times (in past) which was bringin uat web.config to prod and causing the prod to point to uat databae, we did this way, i.e dynamically reading the param values from a file and loading them to web.config dynamically.

Is this right? The web site is loosing connection string once a while and making the site to go down. One thing i noticed is in DEV / QA / UAT we have the ASP.NET version tab in iis set to 2.0, but in prod it's been set to 1.1. I told them to change, but somebody arguing how it worked for a while and suddenly stopped. I don't know the answer. Could somebody tell me or point me to a direction to fix this.

private void LoadConfig()
{
string xml = null;
FileStream fs = null;
StreamReader str = null;
System.Xml.XmlDocument xmlDoc = null;
System.Xml.XmlNode xmlNode = null;
EventLog _eventLog = null;
try
{
// Get the Config path from registry, parse and set the static properties of the class.
string configFile = CompName.CoreLib.SystemUtilities.RegistryUtility.ReadValue("ConfigPath") + @"ApplSettingsConfig.xml";
//string configFile = @"C:" + @"Common.Config";
// Read the XML Config File
fs = File.OpenRead(configFile);
str = new StreamReader(fs);
xml = str.ReadToEnd();
str.Close();
fs.Close();..............................