Prior to .NET 3.5 SP1 applications that are run from a network location run in a Partial Trust environment. This affects what the application can do.
Most developers get a rather rude first introduction to partial trust when they accidentally run their projects from a network share as opposed to their local drive. Because default policy grants restricted permissions to code that's not on the local drive, suddenly things that used to work in the program start throwing security exceptions. Actions that are obviously security related, such as calls to File.Open, now throw SecurityExceptions. But many things that don't appear to have any security sensitivity also begin throwing that same exception, such as the PropertyGrid control in a Windows Forms application. The newsgroups abound with these problems.
So whether or not this is ok in your situation depends on the framework version installed on the client and what your application actually needs to do.