by Ken Task.
You have to create manually. Moodle will not do that for you. What you are setting in the Moodle UI is sort of a 'label' for the DB. Manually create the folders first via command line. Set permissions/ownership for apache user/group as well. When in Moodle configuring a File System repo, the folders you created should show in the pick list of folders.
'spirit of sharing', Ken