Workaround:
NOT to select “Create a subdirectory for each database” option in the Backup Template.
Then when the backup template is deployed – Specify the backup location and append it with the “%D” or in the Backup Template embed the name of the backup directory and append it with “%D”.
Status:
This has been fixed in the latest version of LiteSpeed Version 8.2
The latest version of LiteSpeed can be downloaded at:
https://support.quest.com/litespeed-for-sql-server/download-new-releases
The zipped file includes both the x32 and x64 installers along with all the LiteSpeed documentation.