Can a Windows service running under Local System create new files on the computer it is running on?

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I have created a Windows Service that has a function that creates a new file.

It is running under "Local System account" with "Allow service to interact with desktop" set to true.

When running under this account can files be created locally?

I can't debug this to get the exact error as it is running in a Lab Manager environment that has no suitable debugger installed.

It looks to me to be a permissions problem based on when the service crashes so the simple answer I need before trying anything else is can this account create files on the Local System?

I can't seem to find a site with the answer...?

Any help would be greatly appreciated.

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"Allow service to interact with desktop" is only needed to be able to display messages for a logged in user.

Local System should have write access to local hard drives. You can not access mapped network drives or any other network resources for that matter.