Is there a best practice for where configuration files should be stored in a Java project. The file type is a Java properties file in this case, but I do use other file types in other projects.
Would the recommendation vary from stand alone application(.jar) to web app(.war)?
You'll find that many open-source projects follow the directory structure used by Maven. In this setup your application source code is kept in src/main/java, application resources, including properties files, in src/main/resources, and other config files in src/main/config. Files related to unit tests use a similar directory structure; src/test/java and src/test/resources.
Personally I tend to use this layout because of its widespread use. I also keep an "etc" directory beneath the project root to house files that aren't directly related to the application. For example, I keep configuration files for PMD and Checkstyle in etc.