Some more information...
system default paths is an option to split sets by their belonging system (neogeo, naomi, etc...). Such an option is available in the rebuilder and scanner.....if you want to use this way of storing sets, you need to assign a folder for each system. This can be done in the Systems dialog which is accessible via scanner or rebuilder.
By default, system default path usage is disabled.
It sounds a bit like you imported Software Lists from MAME....in this case you're forced to use system default paths. But generally, for MAME, you don't need to import software lists...especially if you're a beginner in using this tool...
During importing the MAME database you're asked if you want to import software lists....so answer NO then.....so maybe you want to start over with a new clean MAME profile based on the latest MAME....and without importing software lists....