file system limitation ?
 

Here is the situation: I'm in a linux console, using mc, have 2 panes, on the left pane I have a directory called bplay and in the right pane I have a file called bplay. I can't move the file bplay from the right plane to the same directory where the directory bplay is. The error is: Cannot overwrite directory"/mnt/lfs/kit/kit/ape/bplay" File exists (17). is this normal for a Linux system ? (because I've heard that in linux everything is a file)

That's correct, you can't have a directory and a file with the same name in the same parent directory. No sane filesystem design would allow this.