Where does the LOCAL SYSTEM account store its "personal" files? [duplicate]

The "user profile" of the LocalSystem account is stored in C:\Windows\System32\Config\systemprofile.

Edit:

Seen your edit to the main post; just a comment: it would be a lot better to use a service account for your application instead of LocalSystem.

The Local System Account is not the same as a regular user account (see MSDN for the full lowdown).

In your situation you could...

1. Create a dedicated account for it (not strictly necessary, but best practice).
2. Give the account the permissions it needs to function.
3. Go to services.msc find the service in question open it and set it to log on as the user account you created.