If the physical path is not inside the web application's directory, you will get an error.
In the following code example, the physical path "c:\inetpub\wwwroot\uploads" is part of web application's directory.
C# Example:
//use the app-based path
Editor1.Setting["security:ImageGalleryPath"]= "~/uploads";
//use the absolute path
Editor1.Setting["security:ImageGalleryPath"]= "/uploads";
//use the physical path
Editor1.Setting["security:ImageGalleryPath"]= @"c:\inetpub\wwwroot\uploads";
or
//use the app-based path
Editor1.SetSecurityImageGalleryPath= "~/uploads";
//use the absolute path
Editor1.SetSecurityImageGalleryPath= "/uploads";
//use the physical path
Editor1.SetSecurityImageGalleryPath= @"c:\inetpub\wwwroot\uploads";
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