Server drives = the hard drives physically connected to the database server computer. (C:, D:, E: ...)
The file browser in the SQL management studio can not browse to (\\fileserver\files\databasebackup.bak)
Perhaps I'm misunderstanding your original post. Do you mean that the computer that you are sitting at has the backup file (on C:) as well as the instance of the database server you are trying to restore to? This shouldn't be a problem, just navigation to C:\ in the restore tool.
Is the problem that you haven't selected "From Device" in the restore wizard? You need to choose that so you can then select "File" as the device from which you are restoring.
-Peter
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