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For desktop apps, isolated storage is a data storage mechanism that provides isolation and safety by defining standardized ways of associating code with saved data. Standardization provides other benefits as well.
Just turn off showing all the hidden files and folders. You're just seeing too much of the underlying OS operations. Introduction to Isolated Storage. http://msdn.microsoft.com/en-us/library/3ak841sy(VS.71).aspx
When accessed/created by a system account, I found the folder here: C:\Windows\SysWOW64\config\systemprofile\AppData\Local\IsolatedStorage
What is Isolated Storage? Isolated storage is, essentially, a special spot on the hard drive that only your application can find. The .NET Framework takes care of managing the actual disk storage. Once you've opened your isolated storage, you can create files or directories in it, and treat it pretty much like any other disk space.
The System.IO.IsolatedStorage.IsolatedStorageFile class supplies two methods for deleting directories and files: DeleteDirectory and DeleteFile. An IsolatedStorageException exception is thrown if you try to delete a file or directory that does not exist.
When debugging an ASP.NET Core app running in IIS in an app pool configured to use the IIS app pool identity (IIS AppPool\*), the IsolatedStorage folder is created as a subfolder of the project's folder.
Isolated Storage is a partial solution to this problem provided by the .NET Framework. It gives us the ability to keep files in an application-specific storage location on a per-user or per-machine basis. As is often the case, the MSDN documentation for this feature is pretty good at the class level.
It's called isolated storage and it's an optimal place to store files by an application that doesn't have full access to the file system. Writing to and reading from isolated storage doesn't require any extra security check.
Isolated Storage is a kind of virtual folder. Users never need to know where exactly the file is stored. All you do is, tell the .NET framework to store your file in Isolated Storage. The physical location of Isolated Storage varies for each Operating System.
Isolated storage is a set of types and methods provided by the .NET Framework for local data storage operations. Essentially, each assembly is given access to a distinct storage area on the computer disk.