I looked in C:\Users\User Name on windows 7, reveiled all hidden folders and still havent found it. Flash Builder is telling me, for Air apps, that "if you are running another instance to shut it down before starting a new one" and I know i need to edit this file but I cant find it and making a new one in C:\Users\User Name does nothing.....
Take a look at this article.
You use the settings in the mm.cfg text file to configure the debugger version of Flash Player. These settings also affect logging of trace()output in AIR applications running in the ADL debugger. If this file does not exist, you can create it when you first configure the debugger version of Flash Player. The location of this file depends on your operating system.