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It came with PD13 Ultimate bundle.
I too suffer from this in trying to install PhotoDirector 5. I have PD13 Ultimate and AudioDirector 5 with no problem during the install.
I have disabled antivirus (Avira), and tried the registry key "hack" and that too did not seem to work.
Running a fresh install of Win7 Pro 64bit.
It was Frank how answered the emails. Although I am very computer savy, knowing my way around, his emails were clear, concise and made it easy to follow the instructions. After I sent the screen shots of the errors and of the Smartsound folder he referenced, the problem was easy to diagnose and the fix simple.

Now, if only PD would use the MoodMapping of SmartSound.....
There might be possible issues in the registry where it's still looking for that location.
Is is in your C:\Users\Your Name\Documents location, right?
Also, check in your registry (Start>search program files box) type in regedit. Look for this
HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer\Shell Folders
and make sure that your folders are pointing to the c: drive.

Unfortunately, a lot of consumer software do not make use of networked drives for the reason, they are consumer software.
Update. I've had Quicktracks since v3 and Premiere v6. I've also had Sonicfire Pro since version 4. With those two library files hanging around, they were interacting with Quicktracks 5, but not Sonicfire Pro v5.
So, Smartsound tech support (stellar) came to the rescue. I had to delete these files, Local.ssdb, UserData.sxl and
UserData4.sxl found in the hidden folder located (within Win7) at C:\ProgramData\SmartSound Software Inc.\Libraries\.
Now, all is well!!! Way to go Smartsound tech support! Of course, I supplied them with screen shots of the directory and the error. Made diagnosing the problem much easier for them.
I've had Smartsound Quicktracks for ages. I also have SonicFire Pro installed. I had SS files stored on various hard drives (with different letters), but now have one big HD where everything was moved to. With PD12U open and I select Magic Music (Smartsound), I get a separate error message that "Folder can not be found. Please mount the drive". I can select Cancel (several drives were once used) several times to get to the MM screen. I select a SS file, and the same process happens over. I will enter Quicktracks/folder and delete the old folders, but when I try to edit a SS clip on the timeline, the same folder error messages start all over again. No matter how many times I remove the folders from with SS, they keep reappearing.
I emailed SS and they suggested deleting the Local.ssdb file. I did, more than one time, but the same problems keep coming back.
I informed SS tech about the situation and am waiting to hear from them.
Does anyone else know where I can find a file to delete that will "reset" SS?
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