Although the location where replication files are stored is not secured by default, you should immediately restrict the FTP site and the UNC share used for storing snapshot (.sch) files at the Distributor. If you use FTP to download the snapshot files, define the FTP site without Write access. Although this is the default setting for many services, you should confirm that the setting has not been changed after installation.
In addition to securing the directory correctly, be sure that the snapshot folder on the Distributor is shared correctly. If the snapshot folder is not shared correctly, the replication agents cannot access the folder and replication fails. On a Distributor server running Microsoft® Windows NT®, the snapshot folder defaults to using the <drive>$ share and a path of \\<computer>\<drive>$\Mssql7\Repldata.
On a Distributor server running Microsoft Windows® 95/98, the snapshot folder defaults to using the <drive> without a share and a path of <drive>:\Mssql7\Repldata. If your application requires the ability to create pull subscriptions on a server running Windows 95/98, you must change the snapshot folder to a network path accessible by replication agents running at the Publisher and Subscribers. You can change the local path to a network path by sharing the folder manually.