file:///C:/directory/filename

Normally I can type and open a corresponding file on a shared drive or local drive by typing as a url in the browser. In the Xwiki when I create a link and add file… it will open the document when I use IE. When I use chrome it will do nothing when I click on the link. If I put file:///C:/directory/filename as a URL in chrome, it opens just fine, but will do nothing when I click on the link from the Xwiki page when using chrome. Also, it will not open in firefox. What can be done to make this work so I do not have to keep two copies of documents? I would like to be able to update the document on the drive when it is updated in the Xwiki without extra work.

This is a security protection from your browser. You can turn off (not recommended), see the documentation for your browser. See for ex hyperlink - Can Google Chrome open local links? - Stack Overflow

Generally speaking it’s not a great idea to use a URL pointing to the hard drive.

You could import the doc in XWiki and then use the wiki as the master source for the document. See the office import application. You could also use the OnlyOffice paying extension to attach the doc to the wiki and open it from inside XWiki, see https://store.xwiki.com/xwiki/bin/view/Extension/OnlyOfficeConnectorApplication

You could also look at the XWiki WebDAV extension but it’s not maintained anymore, see https://extensions.xwiki.org/xwiki/bin/view/Extension/WebDAV%20Server