When I try and open a help file (.chm) that resides on a unc path I get the following error: "Navigation to the webpage was canceled".
If I copy the file locally I am able to open it.
I imagine there is a security tweak to make this work.

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See KB article http://support.microsoft.com/kb/892675/ which includes detailed explanation of the issue, examples and methods for deploying changes across your domain. I've copied a couple of examples below for reference.

If you want to permit opening of all CHM files in the "Intranet" zone, then the following registry entry will do the trick.

REGEDIT4
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\HTMLHelp]
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\HTMLHelp\1.x\HHRestrictions]
"MaxAllowedZone"=dword:00000001

If you want keep things more secure and only permit access to CHM files on a certain UNC path, then use the following instead replacing \\productmanuals\helpfiles with the UNC path that you want to allow (don't forget to use double backslashes)

REGEDIT4
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\HTMLHelp] 
[HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\HTMLHelp\1.x\HHRestrictions]
"UrlAllowList"="\\\\productmanuals\\helpfiles"
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See this KB article: http://support.microsoft.com/kb/896358

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The answer I gave for a similar question may also apply to you - thought I would at least throw it out in case it did.

http://serverfault.com/questions/19073/prevent-run-or-cancel-box-from-popping-up-on-every-use/20624#20624

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