Learned some more on this....
Apparently managed paths are in different web apps, at least they are here. The problem seems to be an InfoPath form writing to a list outside of its own web app with Domain Security Level. What makes this confusing is that our web apps are within the same Domain. I am now wondering if I am misunderstanding the definition of Domain within the InfoPath world.
I do know that if am going through debug mode/preview I get the same error as above when writing to a list. I have to publish and test from where I published. Again, my local machine and the site I am writing to are in the same logon Domain.
So, now my question is does Domain Trust mean trust within the same logon domain, web app, or something else?