I have just had to write a web application that links to the local file system (NFS actually) to open a directory that stores common business files in FireFox 3. It doesn’t allow it. I found many sites saying this, but not offering any real helpful workaround. Mozilla is quite clear about this fact, and the appropriate work around:

For security purposes, Mozilla applications block links to local files (and directories) from remote files. This includes linking to files on your hard drive, on mapped network drives, and accessible via Uniform Naming Convention (UNC) paths.

http://kb.mozillazine.org/Links_to_local_pages_do_not_work

The solution is to alter the security settings for the site in question, with the exact settings shown above. Note that the settings do not require using the user.js / prefs.js file and can be enabled in about:config, although doing that on many computers might be a drag!