1. Locate the user files directory, this can be found in options > General. Click "open folder" under "application data directory". You will see the User Files folder located in this folder.
2. Close Toad
3. Back in Windows explorer, User Files folder, look for a file named "~EditorBackups.txt". Delete this file
At this point, you should no longer be prompted, but if you want to completely clean everything, look for any other files in the User Files folder begging with a tilde (~) and ending in .tmp, they are usually named something like "~eb94E2.tmp". These are your actual backed up files, user can do as he/she pleases with these, recover manually or delete