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I have replaced the code as displayed, however the problem is still there. Is this a problem that is only occurring due to it being previewed locally and not on a server?
It might be, yes. Browsers tend to lock down the functionality of a locally stored SWF.
you may want to publish your Flash as .swf, wrap it in HTML and preview file in the browser. This way, even while locally, you might be able to see the right behavior.
At least that's what I tend to do...