Flash IDE, XML stream error 2032, Firewall settings

After a few hours of mystifying troubleshooting I found 2 other users with the same problem I’m currently experiencing.

The Flash IDE fails to load XML, but viewing the same SWF in a browser (or opening it using the standalone Flash Player) works just fine.

The error message from the IDE is:

Error #2032: Stream Error. URL: file:///c|/myXML.xml

The 2 other users I found with the same problem are here. It seems that if Flash is blocked on all IP addresses and all ports that you won’t be able to load local content in the IDE.