Sorry but I don't quite follow what you are saying. When you "right-click virtual directory and browse" are you displaying the whole HTML page or just the .swf?
If so that could just mean that the .swf is in fact in the directory, not that the coding to display it is correct.
Without a little more info, it's kindof hard to tell what the problem may be.
Best of luck,
Looks like the problem is most likely a pathing issue. The data=".... part should be the path to the .swf relative to the Web page on which the .swf is located. So depending on the name of the folder in which the Web page is located (let's just say the Web page is in the "test" folder), the path would be
param name="movie" value="FlashObjects/logo.swf">
So remove the reference to C: and us forward slash to denote folder levels.