1) Make sure Toad is closed.
2) Go to C:\Users\username\AppData\Roaming\Quest Software\Toad for Oracle\x.x\User Files and open the Toad.ini file. x.x is the version of Toad for Oracle being used.
3) Search for [EditorMRU_Files].
4) Remove the extra characters that have been added to the paths under the [EditorMRU_Files], delete all entries if required.
Note: To be safe, you may want to create a back up copy of the Toad.ini file before modifying it.