When selecting this option under EHR settings, a dialog box asks to Browse For Folder. When Make New Folder is selected and a New Folder is created, if the name is changed it creates a folder with that name but it places the records in another "New Folder". I don't know if this is a Crystal issue or a Windows issue.
It may be a folder permission issue on your workstation. You can go to your C: drive, then Program Files (x86) Right click on the CrystalPM folder and choose Properties In the Security tab click Edit... Click on each of the Group or user names and make sure that the Allow Full control box is checked and then apply changes.