JSI Tip 8842. When you open a local HTML Web page on Windows XP SP2, scripts that reference .HTC or .XML files do NOT run properly?

The subject behavior may occur when the HTML page and the .HTC and .XML files are all stored on the local computer.

To workaround this issue, you can use HTA (HTML Applications) files instead of HTML files, or you could create a local share where you save the HTML page and the .HTC and .XML files, and in Internet Explorer, add the share as a trusted site.