The file'c:\Inetpub\Web Applications..' should be fully accessible by the current web application user. This means that you need to give full rights(read and write) for this file to the ASPNET/Network Service windows account. If you are using impersonation for your site, you need to give write permissions to the impersonated user account as well.
If you do not wish to give full access to this file, you can disable the custom words functionality by setting
the AllowAddCustomproperty to false.
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