Okay, upon trying to recreate that error, the closest I can get is "The project directory could not be created."

I get this from having no disk space (I just set a quota for that..) and also from not having the folder exist that it's trying to create to.

My suggestion: Manually reset the project path to a new folder somewhere else on the C:\ drive, for testing. If it works, reset it AGAIN to its usual folder, and try it. (Delete the test projects when you're finished.)

If THAT doesn't work, then there's something else wrong, and I'd have to think a bit..