You misunderstood me. Ymust specify key, not the path. Here are two options:
1. If you have (or want to use) configuration file, it must have the fillowing structure:

<?xml version="1.0" encoding="utf-8" ?>
<configuration>
        ...
	<appSettings>
                ...
		<add key="XSDSchemaPath" value="c:\file.xsd" />
                ...
	</appSettings>
        ...
</configuration>

(where "..." denotes other parts of the file).
After this you must use the key, not the path:

xmlschcolImportXML.Add("http://www.tempuri.org/dsfile.xsd", New XmlTextReader(ConfigurationSettings.AppSettings("XSDSchemaPath")))

For more information about custom configuration settings, see following topic in VS .NET help: ms-help://MS.VSCC.2003/MS.MSDNQTR.2003FEB.1033/cpgenref/html/gngrfappsettingselement.htm.
2. If you do not want to use configuration file, simply specify the path:

xmlschcolImportXML.Add("http://www.tempuri.org/dsfile.xsd", New XmlTextReader("c:\file.xsd"))