Folders added to the Folder List must be specified using Universal Naming Convention (UNC).
In the Browse For Folder dialog, folders must be selected from the Network tree (My Network Places on XP) in order to insure that the folder path is in UNC format.
UNC Format: \\machinename\sharename
For example: \\FJD-PC\Recorded TV
Note that folders must be shared before they will appear in the Network list in the Browse For Folder dialog.
See Folder Sharing
To create a new folder, click Make New Folder, type the name for the new folder and then click OK. When creating folders in this manner, it may still be necessary to set up sharing for the new folder before it will work correctly in the Console.
Selecting the folder path in other than UNC format will not be accepted:
Click Retry and then select the folder from Network (or My Network Places).