Hi Toyman61,
Let us run the Windows Media Player troubleshooter and then try assigning the new default location.
Method 1. Windows Media Player Settings troubleshooter
Open the Windows Media Player Settings troubleshooter by clicking the Start button Picture of the Start button, and then clicking Control Panel. In the search box, type troubleshooter, and then click Troubleshooting. Click View all, and then click Windows Media
Player Settings.
http://windows.microsoft.com/en-US/windows7/Open-the-Windows-Media-Player-Settings-troubleshooter
Ripped files are automatically added to the Player Library. On your computer, the files are located in the folder in your Music library specified on the Rip Music tab of the Options dialog box. You can change the folder at any time. For more information
about the location of ripped files, see http://windows.microsoft.com/en-US/windows7/Change-settings-for-ripping-music
Method 2. **After running the troubleshooter we can try changing the default location and check.**Let us try it this way and make sure that we click on Apply and Ok both in the last step.
By default, when using Windows Media Player 12 to rip music CDs, audio files are placed in your "Music" folder, which in Windows 7 is "C:\Users[YOUR_USERNAME]\Music". You can customize the location.
Launch Windows Media Player 12.

Change Default Location for Ripped Music Files in Windows Media Player 12
- In Library mode, press "Alt", then navigate to "Tools" -> "Options..." or right click on any blank space on the menu bar and choose "Tools" -> "Options...".

Change Default Location for Ripped Music Files in Windows Media Player 12
2. Switch to "Rip Music" tab. Click "Change".

Change Default Location for Ripped Music Files in Windows Media Player 12
3. Choose a folder as the location for ripped music. Then click "OK".

Change Default Location for Ripped Music Files in Windows Media Player 12
4. You can see the location for ripped music is now changed. Click "Apply" and "OK" to close the dialog.

For more information refer to the articles below.
http://windows.microsoft.com/en-US/windows7/Change-settings-for-ripping-music
http://windows.microsoft.com/en-us/windows7/Rip-music-frequently-asked-questions
Hope this helps.
Thanks and Regards:
Shekhar S - Microsoft Support. Visit our Microsoft Answers Feedback Forum and let us know what you think.
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