Security issue - trying to load a local flash file

We have a web application that is trying to load a local flash (.swf) file. The web site is on a central server, but accesses a file on the user’s c:\ drive.

The security model changed with flash 8 to disallow this (by default). It works file if you put a webserver on the local machine and refence it using http://, but if you just refer to c:\filename.swf, it fails. The Adobe website has an article on this, but we cannot get it to work. We must be leaving something out. Has anyone done something like this?