The key is added in both web.config and app.config.

They both use the same names:
key="SecurityDatabaseKey" value="FSLSecureDB"

Both files have a database connection defined as well in the databases section:
add key="FSLSecureDB\Connection" value="Data Source= etc." (actual data source information not shown)
add key="FSLSecureDB\DataAccessClass" value="DataAccessSql"

I know these entries work because I am able to log in with the default "mm" user.