I don't see anything in the docs, other than this, which just says that "Some operations aren't permitted", but doesn't say what, exactly. My guess is that it doesn't want you copying out of isolated storage to arbitrary locations on disk. The docs do state that the destination can't be a directory, but even if you fix that, you still get the same error.
As a workaround, you can open the file, read its contents, and write them to another file like so.
using (IsolatedStorageFile store = IsolatedStorageFile.GetUserStoreForAssembly())
{
//write sample file
using (Stream fs = new IsolatedStorageFileStream("test.txt", FileMode.Create, store))
{
StreamWriter w = new StreamWriter(fs);
w.WriteLine("test");
w.Flush();
}
//the following line will crash...
//store.CopyFile("test.txt", @"c:\test2.txt");
//open the file backup, read its contents, write them back out to
//your new file.
using (IsolatedStorageFileStream ifs = store.OpenFile("test.txt", FileMode.Open))
{
StreamReader reader = new StreamReader(ifs);
string contents = reader.ReadToEnd();
using (StreamWriter sw = new StreamWriter("nonisostorage.txt"))
{
sw.Write(contents);
}
}
}