The file must be accessible to the client browser. This means that it must either be on the client machine or accessible through a share. If you want to store files in a central location, use a shared folder or create a way to copy the file to the client when you need it.
Regarding file download, it depends on how you should do it. If it uses a standard file input tag, it will work as follows:
HTML snippet:
<form action="upload.asp" method="post">
<input type="file" name="uploaded_file">
<input type="submit" name="submit_upload">
</form>
the code:
void UploadFile(string filepath, Browser browser)
{
FileUpload upload = browser.FileUpload(Find.ByName("uploaded_file"));
upload.Set(filepath);
Button submit = browser.Button(Find.ByName("submit_upload"));
submit.Click();
}