It is no longer possible to change the default location of the User Files in 9.7, by going through options | File/ General Menu.
Upgrade to Toad for Oracle 10.0, in the Toad Option - General section, there's an 'Application Data Directory' section to set the path of the Application Data Directory where the User File folder resides.
Visit Quest Downloads website to download Toad 10:
https://support.quest.com/SUPPORT/index?page=downloads
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