IIRC the cfs3.xml should be in the root folder of the install you are using? I.e. straight under Combat Flight Simulator 3/, not under a sub-folder? Just from memory not on CFS computer at the moment.
A common approach is to match the FPS with the refresh rate of your monitor. So for a LCD monitor at 50Hz, a FPS of more than 50 is a waste of time and it might be simpler for the graphics processing if the FPS matches the Hz.
CFS3.XML is in the "default" subfolder (at least in my ETO). I set the maxFPS to 20 in my ETO install. Sometimes it helps to prevent stutters setting the value a bit below what the system can handle.
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