xml file writing problem

[Guest]

I built an asp site with formsauthentication.
Users are checked and added in Users.xml.
When I place Users.xml in C:\ it works fine.
When I place Users.xml in the current directory -
(System.AppDomain.CurrentDomain.BaseDirectory)
which is the webdirectory -
I get an path access denyed exeption while writing.
When I change the filename to Users.txt it works !!!

What it the problem?

Current config: XPSP2 and IIS 5.1 Dot.Net 1.1.4322