i am starting to use cryptostream class. i may be wrong, if you encrypt something, close the app, and then try to decrypt it, it will not be able to because a different key will be generated. because i do need this functionality, i am wondering if it's possible to save the key in application settings and whether this is the right way to go?
Lots of applications save the keys in configuration files. It's a common bad practice.
It's not secure but all secure options are hard to implement. There are options using different factors,
You can derive the key from a password using PBE (password-based encryption). But you have to enter a password to start your application. This is so called "What you know" factor.
Put the key in a smartcard. This is very secure but you need to have access to the card on the machine. This is called "What you have".
Ignore other schemes involving encrypting keys with yet another key. It doesn't really change the security strength.
If you always run your app under the same user account (it can be a local user or a domain user), the best option would be to use DPAPI. The advantage of using DPAPI is that you do not have to worry about the key (the system generates it for you). If you run the app under different user identities, then it gets more complex because the options that are available range from bad to worse (the major problem is: how do you protect your secret: key, password, passphrase, etc). Depending on what you want to do, you may not need to use encryption at all (e.g. if you want to encrypt a connection string, consider using integrated windows authentication, which does not require a password). For more info on the topic, check out this MSDN article: Safeguard Database Connection Strings and Other Sensitive Settings in Your Code; it may give you some ideas.