I can reproduce this on Hardy, let's move this bug report into Hardy.
(I'm also unsure if this is a bug or just a security feature with a poor
UI
** Changed in: gutsy-backports
Status: New => Incomplete
** Changed in: gutsy-backports
Status: Incomplete => Invalid
** Also affects: firefox-3.0 (Ubuntu)
Importance: Undecided
Status: New
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firefox will not open local files from remote files
https://bugs.launchpad.net/bugs/208091
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