You "can" run an executable from a shared folder but that depends on the
executable. If it is a setup file it should work however there are viruses
and spyware that will prevent that if you are infected. I'm talking about
installing software on the computer you are in front of when the setup file
is on the remote computer. If you are trying to install that software onto
the remote computer then you have to use the "AT" command which you can run
from your computer. More info on the "AT" command can be found here
http://support.microsoft.com/kb/313565

some terminology.

Computer A accesses Computer B
So computerA is LOCAL.
computerB is REMOTE.

You can run an executable -from- a "shared folder"(so from the remote
machine's hard drive), but it runs -on- the local machine  (I don't do
it often, but I just tried it)

In your case, you say it is not doing anything, which is strange..

And you said you want it to run on the remote machine. Or did you mean
you want to run it FROM the remote machine, but ON your local
machine?   In both cases it is running from the remote machine..Or
rather, read from the remote machine's hard drive.
But,
File and printer sharing, it runs ON local. Meaning, it runs on the
local machine's CPU.  So programs open up on the local machine.
And regarding Whose C drive it sees.  It sees what the local one calls
C, which happens to be local.

Copying the file onto your local machine's drive might help if for
some odd reason it wasn't working.

If you wanted to run it from and on the -remote- machine, then  double
clicking the file is not what you are looking for. File and printer
sharing is not what you are looking for.

The purpose of FnP, and
The way it works, is the file is stored on the remote machine. On the
remote machine's hard disk.  So it is read from there, can be modified
and saved back there. . That is the limit of what can happen to those
files on the remote machine with "file and printer sharing"

So if you double click it,  then whether it is a txt or an exe,
windows acts  like it is any other local folder. The idea is that
although you are using the remote machine's hard drive

(note- it's not really "sharing"- like a business has co-owners.
sharing implies ownership.  You don't each get a portion.   It's
USING.    remote runs the server whose service your local client
software is using. There are no owners when it comes to computers.
People own things.  You use it, it's like it's yours. Who owns it is
about paper, not computers).

FnP makes it appear as if  it makes no difference that it happens to
be located remotely. It may as well be your hard drive.

And so if you double click a file, it opens as if it was on your hard
drive - just your hard drive located remotely / far away. A directory
on the remote hard drive, is yours - maybe limited access like read-
only, or may be read-write access, but it's yours to use.

And if you execute a file, it opens as if it is on your hard drive .
It executes on your computer, so on your CPU, and typically puts files
on C which happens to be a drive in your computer.

Actually, as a test, I was on \\laptop, and put speedfan.exe into a
"shared folder" called qw. .. \\greycomp\qw .
I ran it from my laptop..  It opened on my laptop but extracted into
the directory it was installed in, which was the remote comp.
The reason was..
It ran on my laptop's CPU, so it sees my laptop's hardware.
But as far as directory/folder/storage is concerned.  The file and
printer sharing makes it seamless.
It extracts into the current directory(the directory where it
resides).. that happens to be the remote comp, then fine.
Or,  it extracts files into c:\something  ,  then the files go on my
laptop hdd. Because C is always going to be the drive of the remote
machine. Which was my laptop.

The bottom line, is it uses the CPU of the local machine.  And since
it typically installs files to C. it tends to put files on the local
machine.
And since it reads/writes files from C, e.g. the registry perhaps ,
it's certainly not going to be installing on the remote machine.

I know that was very repetitive, but what the heck.

Fact is.. you were very unclear.. It looked like you were talking
about running it on the remote machine.
Then you talked about a solution of copying it to a local folder..
Maybe if the concept is clearer - I doubt my post will help clarify
it- but if it does, then maybe you can get your terminology clearer.

It sounds like a permissions issue, I don't have that issue on mine. Check
the security of the document and settings folder see if your account has the
proper permissions.