Can we have multi web.config files in the same website?!

Yes you can "for example one web.config for root website and another one for a subfolder"

How can we do so with out conflict or getting errors?

- First you will need to config this subfolder as application in the IIS

- Second write <location path="." inheritInChildApplications="false"> before <system.web> and </location> after </system.web> in the root web.config file:

<location path="." inheritInChildApplications="false"> 

   <system.web> 

   ............ 

  </system.web>: 

</location> 

references:

http://msdn.microsoft.com/en-us/library/aa719558.aspx

http://www.experts-exchange.com/Programming/Languages/.NET/ASP.NET/Q_23438651.html