Hello Praveen,
You could use the Write File action block to save any file to the local server. However there are few points to consider.
1. Give the URL as C:\Folder1\FileName(with extension).
2. Make sure you have access to the folder. Check Write File Action - How to pass User Credentials | SCN . Or you could just share the folder to <<Everyone>> and then use it.
3. By default MII points to its web directory. However you could change it in "System Properties" screen in MII Admin Menu. Delete MII in the Default File Path: field and make it blank. (Note:: This step is for MII 14.0 and above.).
However, even if you save the file in MII's Web folder, you would still be able to access it in the local system where Netweaver/MII is deployed . The path to the folder is
C:\usr\sap\N73<<server id>>\J00<<Instance Number>>\j2ee\cluster\apps\sap.com\xapps~xmii~ear\servlet_jsp\XMII\root\CM
You could also check::
Text, Image Saver permission issue
WriteFile Authorization Specification
About the other question, MII transactions are not saved in local server. They are saved in databases. Only Web content is stored in MII Server.
Regards
Tufale Ashai