Can we create two way socket communication for file transfer?? Means Transferring files from Desktop PC to Android device and vice versa.
Network sockets, yes. Android supports standard Java
sockets, so anything that uses those has a decent shot of working.
And Is it possible to store the files in the device other than SD card???
Yes, but depending upon the device, there may be very little storage on the device itself. In the case of the T-Mobile G1, we're talking 70MB total. Other devices may have substantially more, of course.