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I'm the IT department.  So not really.

I can upload off a networked drive with IE and Firefox.

I am pretty sure I've been uploading off  Networked drives with Chrome before.

I store most of my images on the u:\ drive .... so I'm always uploading from it.

I can also upload to tinypic via Chrome off the networked drive.

I'll see if I can find out more about the Flash uploader xenforo uses.

Shadab says Xenforo uses SWFUpload.

I'll look into it.