I just moved the installation to a service (using option 1 from Migrating from User to Service install on Windows). There were one or two additional steps required, but the service started and I logged in from the gui.
But the problem persists: tried to run one of the backups manually, and got the same folder does not exist error.
With respect to network locations, the two PCs are less than a metre apart, and definitely on the same network.