I forgot to mention that I am running SEP 11.x MR4 on Win2K3 STD SP2.

I'm having the same issue, anyone have any clue?
Although it doesn't seem to be affecting anything.

Win2008 64 bit, latest version of SEP, running MS SQL 2005 remotely.

May 1, 2009 5:51:23 AM EDT: Failed to read %PHYSICAL_FILE% [Site: MYSITE] [Server: my-server]

Got the same problem here, 4 times a day or so.

It is a nuisance that I have to open all of the attachments in the email alerts just in case there is a real fault happening.

I have a new installof SEP as well (11.x MR5) and just started getting this error as well.  Any feedback to assist with resolving this would be greatly appreciated.

 I would recommend opening a new thread as this is very old.

for your issue
Grant permission to the proxy server and to the "Websense" program to gain access to the Symantec update site.