Continue to keep your application settings and other data in the application's install directory. There is no need to change the directory locations just for a "PC only" install.  
The solution to file access issues is to change file permissions during install.  
For example, this answer someone posted using WIX installer.  
A similar question is answered here.
You could use code similar to this to change permissions during install (when the user has admin privileges)
using System.Security.Principal;
public static void SetPermissions()
{
String path = GetPath();
try
{
    // Create security idenifier for all users (WorldSid)  
    SecurityIdentifier sid = new SecurityIdentifier(WellKnownSidType.WorldSid, null);  
    DirectoryInfo di = new DirectoryInfo(path);  
    DirectorySecurity ds = di.GetAccessControl();  
    // add a new file access rule w/ write/modify for all users to the directory security object
    ds.AddAccessRule(new FileSystemAccessRule(sid, 
        FileSystemRights.Write | FileSystemRights.Modify,
        InheritanceFlags.ObjectInherit | InheritanceFlags.ContainerInherit,   // all sub-dirs to inherit
        PropagationFlags.None,
        AccessControlType.Allow));                                            // Turn write and modify on
    // Apply the directory security to the directory
    di.SetAccessControl(ds);
    }
    catch (Exception ex)
    {
        MessageBox.Show(ex.Message);
    }
}