Web.config is not transformed when debugging code

You can transform Web.config on build. Add this target to *.csproj file:

<Import Project="$(MSBuildExtensionsPath32)\Microsoft\VisualStudio\v$(VisualStudioVersion)\WebApplications\Microsoft.WebApplication.targets" />
<Target Name="BeforeBuild">
    <TransformXml 
        Source="Web.Base.config" 
        Transform="Web.$(Configuration).config" 
        Destination="Web.config" />
</Target>

Keep the origin configuration in Web.Base.config. It's enough to enable transformation and it works for any XML config file. SlowCheetah is no longer needed at all.

http://sebnilsson.com/a5410281/asp-net-transform-web-config-with-debug-release-on-build/

XML transformations will only be applied when you publish web apps and not during build.

This blog post details a work around using build settings.