yes, dnn runs in medium trust -in fact most of the core and project teams only work and test in medium trust (we use the development.config file renamed to web.config, rather than release.config ). The are a few exceptions to this rule, I believe that the a few of the alternative authentication providers (active directory and openID) require full trust, but their dnn manifest file should ensure that they can't be installed unless running in full trust. We've supported medium trust since 3.0 and will continue to support it - many ISP's only allow medium trust so to do anything else would be unwise.

Please note: many 3rd party modules do not support medium trust, or else make use of webrequest/certain reflection calls etc that mean they require full trust.

Cathal

In medium trust the code access security definition for fileio is

                                         class="FileIOPermission"
                                    version="1"
                                    Read="$AppDir$"
                                    Write="$AppDir$"
                                    Append="$AppDir$"
                                    PathDiscovery="$AppDir$"
                            />

All this means you can only read/write/append to the current webroot and sub-directories i.e. you cannot create directories or files outside the website itself. Im not 100% sure why you're seeing this as it appears to be a folder within your site - i would guess either that your permissions are wrong (do you have modify permissions for the right user i.e. aspnet/network service)? Is the D: drive a local drive - if it's actually a network drive this would cause this issue as you're trying to create files/folders on a machine that the site doesn't know the policy for.

Cathal