Windows Store app local folder data lost when running WACK? - windows-store-apps

Question

My first Windows Store App is almost ready to be uploaded. It passed the Windows App Certification Kit test on my machine. However if I "build packages to upload to Windows Store", it fails the test due to "Crashes and hangs". I found out that the WACK deletes my package folder before running the test, and because the app needs to load data from there upon start, it will probably not find it and thus hangs.
My questions are:
What happens to the files in my Local folder (i.e. C:\Users\...\AppData\Local\Packages\packageName\LocalState) when the app is packaged?
If I need to read and write data from files upon app start, where should I keep these files?
Thank you a lot for your time!
I am using Visual Studio 2013 Update 2, WACK 3.4.
Here is some code that runs when my app starts, I try to deserialize an existing file in the Local folder:
StorageFolder localFolder = ApplicationData.Current.LocalFolder;
StorageFolder demoFolder = await localFolder.CreateFolderAsync("Demos", CreationCollisionOption.OpenIfExists);
StorageFolder gameRecordFolder = await demoFolder.CreateFolderAsync("GameRecords", CreationCollisionOption.OpenIfExists);
string filename = gameRecName+".xaml";
StorageFile gameFile = await gameRecordFolder.GetFileAsync(filename);
GameRecord g;
using (Stream fileStream = await gameFile.OpenStreamForReadAsync())
{
XmlSerializer serializer = new XmlSerializer(typeof(GameRecord));
g = (GameRecord)serializer.Deserialize(fileStream);
}