Recently I work on WPF-XBAP application that will run from intranet website:
This application must have unrestricted access to client's OS resources (that is unusual for XBAP projects):
I publish it on local website by using "Click-Once" deployment mechanism:
User can launch the application from deployment page (also can run application setup):
I get security error ("User has refused to grant required permissions to the application"):
Means that application tried to perform some restricted action, beyond of XBAP sandbox. Actually it tried to read local video file:
(It reads video file from local source, for preview option before uploading it to FTP server)
After some research I found how to fix that:
(1) Project must be signed with "Click-Once" manifest (security certificate file):
(If project doesn't contain "Test Certificate" click on rounded button to create a new one)
(2) After temporary certificate was created we'll save it into file (click on "More Details"):
File export wizard (step A):
File export wizard (step B):
File export wizard (step C):
(Enter username and password, only if you did so while "Test Certificate" creation in par. 1)
File export wizard (step D):
File export wizard (step E):
File export wizard (step F):
(Now project certificate is saved as external file)
(3) Now we'll go to Internet Explorer and will register this certificate:
(Open "Internet Options" from "Tools" menu)
Click on "Certificates" in "Content" tab:
Import certificate file from "Trusted Root Certification Authorities" tab:
File import wizard (step A):
File import wizard (step B):
File import wizard (step C):
File import wizard (step D):
Confirm importing:
If succeed you'll get this window:
And will see certificate here:
Do same in "Trusted Publishers" tab:
Close IE options:
(6) No we'll go to "Signing" tab in project options and will select registered certificate:
Select registered certificate from local store:
(5) Republish the application:
Now XBAP can run in "Full Trusted" mode:
Hope this post was helpful 
from:http://blogs.microsoft.co.il/maxim/2008/03/05/how-to-run-wpf-xbap-as-full-trust-application/