DeMignon: Settings.txt is located in your user account application data folder.
Press Windows-Key and R on your keyboard and a window appears, where you can enter commands.
Copy-paste the following, to jump to the desired folder:
%appdata%\runic games\torchlight
This leads to the folders:
- Win XP/2k: \Documents and Settings\%USERNAME%\application data\runic games\torchlight
- Windows Vista/7: \Users\%USERNAME%\AppData\Roaming\runic games\torchlight
The AppData folder is by default hidden, so you might not find it using the Explorer.
Jumping there by shell command always works or alternative you can make them visible by changing Windows settings (e.g. in Win XP Explorer => Tools => Folder Options => View Tab => Show hidden files and folders)
Furthermore the shell command also works in non-English versions of Windows.
Thank you very much, this works for me.