Crossdomain.xml

I’m developing an appliction using asp.net and flash 8, and am having problem accessing files on a remote domain. When I try to load a picture using loadClip I get this error:

SecurityDomain ‘http://www.stjepansvaljek.com/img/img%200042xz.jpg’ tried to access incompatible context ‘file:///C|/Documents%20and%20Settings/Ivan/My%20Documents/Visual%20Studio%202005/WebSites/stjepansvaljek/flash/main.swf’

After googling a bit I’ve added a crossdomain.xml file to the root of www.stjepansvaljek.com and allowed all domains the access, using domain="*"; but that didn’t do it for me.

The page containing swf file displays fine when uploaded to server, but when i run it on localhost it displays incorrectly, and when the movie is ran in flash ide it throws the above error.

localhost is a winxp machine running behind a router, which is represented by dyndns name.

Any ideas?