UPDATE MARCH 2008
Check this one and this one



Due to the recent changes within GE 4.0.2416 (nov 2006) compared to GE 4.0.2091 (sept 2006) the targetHref tag within the Update tag needs to be served over a http protocol. The reason for this is security. This change is yet undocumented, except for the messages in this thread.

I reckon this is such a pity, since distribution of the most moving animations are only possible with local stored networklink constructions, either in a local map or in a locally stored kmz.

Yet, I believe there is a solution which doesn't create security treaths:
The use of relative paths in the targetHref tag of the Update tag. I wrote about that earlier here .
I imagine that if a targetHreft doesn't start with http (that is including https), it should be taken relative to the calling file. A targetHref should be NOT allowed if it contains either "./" or "../". Doing so, any kmz containing a networklinked animation could form the root-path of the networklinked animation, yet unable to change any other file already present on the local system.

So if a downloaded kmz, stored in any temporarely folder, has a doc.kml
it will be able to call for a networklink networklinkcontrol update construction involving any file, as long as that file is within the same kmz-file or its subfolders,
or, in case the kmz is unpacked in a local folder:
the doc.kml will be able to call for a networklink networklinkcontrol update construction involving any file, as long as that file is within the same folder or its subfolders

Clear, simple and fool proof.
I hope the GE team will consider this.

Sven