Thanks to some helpful Moodlers on Moodle.org’s forums we were able to work out that the local file linking trick highlighted yesterday is not allowed by modern browsers (younger than IE4) and will be completely phased out of the Moodle 2.0 release this summer (there will be no administrative setting to enable it).
Read more at: http://moodle.org/mod/forum/discuss.php?d=153104
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