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The first conflict is the woman's, Matilda, feelings of inadequacy as she is not married into the life that she feels would award her the beautiful things she wants. This is an internal conflict.
The external conflict arises after she has worn the necklace. She has to find a way to replace the lost necklace. She believes it to be very valuable and can not figure out what she should do. This led to her husband using all his savings from an inheritance and then having to borrow the rest of the sum. They had to work desperately hard for ten years to pay it all back.
Matilda has changed her life and all because she could not accept that she had once had a better life.
In my opinion, the main conflict in this story is internal -- it is a conflict within Madame Loisel herself. She feels that she was born in circumstances that are not as good as she deserves.
The central problem in the story (the ability to pay for the lost necklace) is caused by the conflict that I just mentioned. Madame Loisel wants to have the finer things in life. Unfortunately, she is not rich enough to afford them.
Therefore, the major conflict is internal -- it is a conflict between Madame Loisel's desire for material things and her circumstances.
Madame Loisel is ultimately the catalyst that created both the internal and external conflict in the story.
Her obsession with society life, luxury, and her fixation to pity herself as someone who is deserving of much more than what she already has is how she creates the internal conflict.
The loss of the diamond necklace came as a result of that internal conflict, because she lost it during a moment of bliss where she "lost herself" in the moment. Had she not harbored this preocupation with luxury and society she would have had more decorum and self control during the activity.
Externally,the replacement of the necklace would come as a consequence of the internal conflict. However, if you look deeper, it was all caused mostly from the "inside" as a chain of sad events.
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