Problem on WindowsXP (likely will happen on all Win installs), first time using Mercurial. I found the answer in an inobvious place so I\'m asking/answering the question myself
This problem still exists. The mercurial.ini file is ignored no matter where you put it.
No mercurial.ini file is created during installation. I created one in the Mercurial install directory, but it had no effect. I copied it to %USERPROFILE% and then to %HOME%, but neither one works.
Putting .hgrc in the HOME directory works.
The documentation ("hg help config") needs to be fixed.