I have not been able to get an azure function working that uses the node file system module.
I created a brand new function app with most basic HTTP trigger function
Yes you can use the file system, with some restrictions as described here. That page describes some directories you can access like D:\HOME and D:\LOCAL\TEMP. I've modified your code below to write to the temp dir and it works:
var fs = require('fs');
module.exports = function (context, input) {
fs.writeFile('D:/local/Temp/message.txt', input, (err) => {
if (err) {
context.log(err);
throw err;
}
context.log('It\'s saved!');
context.done();
});
}
Your initial code was failing because it was trying to write to D:\Windows\system32 which is not allowed.