The appsettings did not work so I can live with the dictionary file residing in the application's bin folder.
However, adding a word via the spell check window does not add the word to the dictionary file. The aspnet user does have modify/write access to the folder & file. Am I missing something here?
Also, in regards to the template error. This is the message:
Could not find a part of the path "c:\inetpub\intranet\dnn\portals\0\templates"
So I copied the templates folder from the CuteEditor folder into the above location and all is well.