FileReference.upload() doesn't upload locally - windows

Question

Trying to upload using flash swf on my local machine running Windows with IIS and PHP 5.3 installed.
var selected_file:FileReference = GetSelectedFile();
var url:String = 'http://localhost.com/upload.php';
var req:URLRequest = new URLRequest(url);
req.data = new URLVariables('source=' + 'computer');
req.method = URLRequestMethod.POST;
selected_file.upload(req, 'file', false);
selected_file.addEventListener(DataEvent.UPLOAD_COMPLETE_DATA, UploadComplete, false, 0, true);
selected_file.addEventListener(ProgressEvent.PROGRESS, UploadProgress, false, 0, true);
selected_file.addEventListener(IOErrorEvent.IO_ERROR, UploadError, false, 0, true);
selected_file.addEventListener(SecurityErrorEvent.SECURITY_ERROR, UploadSecurityError, false, 0, true);
I've set breakpoints on all the handler functions. I hit a breakpoint on UploadProgress handler. However, the file isn't being uploaded. When looking at network traffic there is no call to upload.php.
Looking at documentation for FileReference upload function I see this:
Uploads and downloads are not allowed if the calling SWF file is in
the local-with-filesystem sandbox
Looking at definition of local-with-filesystem sandbox I found this:
From this sandbox, executable code can read local files (by using the
URLLoader class, for example), but cannot communicate with the network
in any way. This assures the user that local data cannot be leaked out
to the network or otherwise inappropriately shared.
Does this mean there isn't a way to test uploads on local machine?
update: Supposedly I need to have Security.sandboxType as LOCAL_TRUSTED. I've been trying to set security type by adding configuration file for user and globally. Configuration file has cfg extension and contains one line, path to folder where my swf file resides.
Still after adding this configuration, Security.sandboxType is set to "remote".

Answer 1

According to Adobe:
The local-with-filesystem sandbox—For security purposes, Flash Player places all local SWF files and assets in the local-with-file-system sandbox, by default. From this sandbox, SWF files can read local files (by using the URLLoader class, for example), but they cannot communicate with the network in any way. This assures the user that local data cannot be leaked out to the network or otherwise inappropriately shared.
You cannot access the file system and network within one SWF instance in normal situations.
However, it appears to be possible to grant this ability to a specific SWF by adding the file to the local trusted sandbox. According to Senocular, this may be accomplished in three different ways...
SWFs run within Flex Builder 2 or the Flash Authoring environment
SWFs located in a directory the user has granted permissions for from the (online only) Global Security Settings Panel.
SWFs located in a directory specified in a Flash Player trust configuration (.cfg) file on the local system
For the Configuration File Option:
You need to compile your SWF with the local playback setting selected.
This means you need to place your configuration file in
C:\Windows\System32\Macromed\Flash\FlashPlayerTrust\
If the folder doesn't exist you must create it.
Then create your configuration file (naming it whatever you
please.cfg) Finally, type C:\ into the file and save it.
Now your whole C:\ directory should be declared local_trusted and shouldn't have any issues contacting your server and accessing your files.