I have a simple C# Console App that reads in an XML file specified the the user, runs an XSLT transformation on it, and outputs the results.
When I distribute my app to
You can embedd it in your assembly.
Add the file in your solution, set the build action to embedded resource.
The place you need to read the file use http://msdn.microsoft.com/en-us/library/xc4235zt.aspx Assembly.GetManifestResourceStream wich will give you a stream wich you can write to a fil or use directly.
If you are not quite sure what name your resource have, I find Assembly.GetManifestResourceNames
usefull to list all resources.