I have seen a few issues for server-side write permissions but I'm doing this locally with no scripting.

How can I ensure this error doesn't arise on a local system?

Function is client-side Javascript:

function saveXML() {
  try {
    xmlDoc.save(xmlDoc.XMLDocument)
  }
  catch (e) {
    displayError("Error updating XML feed: " + e.message + ". Please check your local directory and file permissions.", 8000)
  }
}

Just right click properties of the vitual directory and click on security and add ASP.NET to enable it to write to local machine