you cand find this in the VRML node reference:
"The Inline node is a grouping node that reads its children data from a location in the World Wide Web"
http://www.web3d.org/x3d/specifications/vrml/ISO-IEC-14772-VRML97/part1/nodesRef.html#Inline
which means the inline url cannot point to a local file
You can also read this: http://www.web3d.org/x3d/specifications/vrml/ISO-IEC-14772-VRML97/part1/concepts.html#4.5