I am writing an IE Extension (BHO) in C#. When run in protected mode (IE\'s new UAC-compliant mode which forces all extensions to run at low-integrity), it fails because it
I would start with the Protected Mode Internet Explorer Reference.
There's one approach that is not especially elegant but you can start another (broker)process with medium level integrity which can do the 'dirty work' and use IPC to communicate with it. To make your life easier I would suggest you to use sockets for communication because they don't require security check which can be tricky when you have communication between processes with different integrity levels.
In order to skip UAC warning when you spawn new process you can modify BHO registration script and add few registry values that will inform IE to silently elevate new process to medium level.
You can find more information here: http://msdn.microsoft.com/en-us/library/bb250462(VS.85).aspx#wpm_elebp
I suggest you to write your own SettingsProvider that saves files in System.IO.IsolatedStorage.
You get a one-shot privileged access during RegisterBHO. After that you are in protected mode.
If you need to change long term storage during the runtime of the BHO, I have found that the registry is the best place. Your changes will be only visible to you, but they will persist.