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As reported to the PSRT:
Python's SimpleHTTPServer class is a simple HTTP server, documented as
serving up the content of the pwd and below readonly via GET and HEAD
commands:
 $ python -m SimpleHTTPServer
 Serving HTTP on 0.0.0.0 port 8000 ...
However, by inserting "../" path fragments within the path section of
the URL, it's possible to traverse other directories within the
filesystem.
For example:
 lynx localhost:8000/../../../../..
shows 5 directories above in the directory structure.
I was also able to browse /proc and /sys on this example using:
 lynx localhost:8000/../../../../../../../../proc
 lynx localhost:8000/../../../../../../../../sys
(by browsing to find the correct number of ".." entries to locate the
root directory); arguable this could be leaking much more information
about the host than the administrator might be expecting (e.g. other
programs being executed on the host, command-line arguments of those
programs etc)
This has been fixed in CGIHTTPServer; see
 http://bugs.python.org/issue2254
and:
 http://svn.python.org/view?view=rev&revision=71303
Guido recommended to not make this secret since no one should be using SimpleHTTPServer in production. He also said this should get fixed.

CVE-2011-0705

This would be nice to fix in 3.2; however, since SimpleHTTPServer is not meant to be used in production, and it's not a regression, I will not hold up the release schedule for it. I'd need to see a patch for deciding.

Agreed, fixing this is going to be too complex for 3.2.0, it'll be done for 3.2.1.
Reading over the http.server Simple and CGI HTTPRequestHandler code I see there many problems with the way this code does things today.
General:
 * I'm not sure urllib.parse.unquote() is called on the path in the correct place all the time. Studying of some RFCs will be required to confirm that. Specifically the CGI handler unquotes the path before fixing it up. The Simple handler never unquotes the path.
Simple (and subclasses such as CGI):
 * The mentioned directory traversal vulnerability.
CGI:
 * The _url_collapse_path_split called by is_cgi lets os.sep's through unchecked so a request for /foo/bar\..\..\..\..\..\../ for example should still find its way out on windows. issue2254 wasn't 100% fixed.
 * _url_collapse_path_split should really ignore the query string and anchor; though the way it is used it likely just wastes time processing them and discarding the result.
 * It uses fork() + execve() on posix systems. It should always use subprocess instead in order to be thread safe.
The first thing I'll be doing is coming up with test cases demonstrating each of these issues.

Lowering priority.

This may be stupid but...
shouldn't the example be:
lynx http://localhost:8000/../../../../../etc/passwd
... which does _not_ work.

unassigning, i don't have time for this one right now. doubtful anyone is going to jump in for 3.2.1 given rc1 is being prepared right now. :)
General recommendation: don't use SimpleHTTPServer in production.

I've attached my proposal for a fix. It's my first, so apologies if I've made a mistake somewhere. Senthil Kumaran, to whom the bug is currently assigned, kindly agreed to let me take a stab at it (thanks!).
The approach I took was to normalize the path by replacing each of os.sep and os.altsep with slashes if (a) these characters are present in the path component and (b) the operating system is such that os.sep or os.altsep != '/'. (Currently, os.altsep is either None or '/' on all systems, but it seemed like a good idea to check anyway.)
Requesting a relative path which, when translated, would point above the current working directory (e.g. http://localhost:8000/../) causes the server to return a 400 error, which is just how Apache responds to such requests.
Internal calls to translate_path with such malformed paths cause translate_path to raise an IndexError, which is consistent with how _url_collapse_path_split (used by CGIRequestHandler) handles them.

I updated the patch, making the emendations suggested by Eric's review, and making a few additional changes. I was bothered that translate_path was duplicating functionality from _url_collapse_path_split, so I made some corrections to the latter and rewrote translate_path so that it uses _url_collapse_path_split and implements only the checks necessary for translating the path to a path on the local file system path.
translate_path relies on os.path to make sure the path is safe, which is (I think) also the proper way to do things, since it's not good to have to remember to update path semantics in http.server if Python is ported to additional platforms.
I also read the various specs and made sure entities are unquoted at the appropriate point.

Ori, which platform did you try to reproduce this issue. I tried in all active codelines (cpython to all through 2.5) from hg and can't able to reproduce this bug on Linux. If someone can reproduce, can you provide exact instructions.

SimpleHTTPServer does not exist in Python3.1 up instead http.server.
All versions (3.x 2011年06月25日) reply the contents from the served directory on a request of the upper directory and act similar with files.
Maybe documentation needs an update documentation.

My test setup:
 test.html
 2.5/test.html
 2.7/test.html
in 2.5 and 2.7 execute ::
 python.exe -m SimpleHTTPServer 8000
``http://localhost:8000/../`` shows the contents of the ``2.x`` directory.
``http://localhost:8000/../test.html`` shows the contents of the file in the ``2.x`` directory not the one in the upper.
Should be closed.

The module documentation for the SimpleHTTPServer class says that.
"""
 This class serves files from the current directory and below, directly
 mapping the directory structure to HTTP requests.
"""
As it is already documented. Nothing else needs to be done for this report. Closing this one. Thanks!

It seems python was being blamed for what is essentially the fault of lynx.
The following would translate into browsing files locally from the system and not from the web:
lynx http://localhost:8000/../../../../../../../../etc/passwd
The correct syntax for testing should have been:
lynx http://localhost:8000/../../../../../../../../etc/passwd 

This should have been
lynx localhost:8000/../../../../../../../../etc/passwd
v/s
lynx http://localhost:8000/../../../../../../../../etc/passwd 

Yes, I seem to have gotten confused about this. Sorry for the confusion, and thanks for clearing it up.