What do you mean by "...my site on two separate IIS servers with nothing being shared between them..."? Is this load balanced environment with no shared folders? In this case, the answer is no - configuration changes do not propagate across to the other side. The current solution is to share the configuration folder.
Currently, we don't have file cache dependency for configuration sections. We have a different mechanism to invalidate configuration in NLB and changing configuration files in run-time is not considered for now, because it is an overhead for the application. Also, there are some scenarios which are complicated, i.e. if you save a config section for the first time, it will create a new file for, but there will be no cache dependency on the other side. We could think about implementing such file cache dependency as an option setting in the future.
The solution for both of you will be released in Sitefinity 4.1 SP2 - the configuration will be improved with option to be persisted in the database.
All the best,
the Telerik team
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