eric could it have to do with disk permissions?
for example, on my win7 laptop, i cannot write to c:\mydb.sdf, but i have no problem writing to C:\Program Files\Microsoft SQL Server\MSSQL.1\MSSQL\Data\mydb.sdf
but on my xp desktop, i can write to either place, mostly because my desktop is runnign with service credentials of a local admin, instead of whatever the default local service or network service account.
Lowell