What's the best way for a VPC to access files on the host machine

I am running Vista64 as the host for Win XP in Virtual PC 2007 SP1. I want to store my files on the host machine and just access them from the virtual pc.

I access the files on the Host through a network share over the loopback adapter. Everyone has read access to the share and in the VPC the share is mapped to the U:\ drive letter.

When I tried to run a web project in Visual Studio 2008 it wouldn't build and threw an exception trying to load referenced dlls. "Failed to grant minimum permission requests." Error code: 0x80131417

This seems to be a code access issue, so I ran the following command against the 1.1 and 2.0 frameworks.

CasPol.exe -m -ag 1.2 -url file://U:\* FullTrust

Now when I try to debug the web application Visual Studio just hangs. How can I make this work or is it a lost cause?

I have exactly the same set up here.

Have you installed the 'virtual machine additions' from the action menu?

This will give you the option of setting up shared folders (in settings). That will map a network drive on the VPC to a folder on the host, this avoids network loopbacks and sharing permissions.