Not a TDS-compliant root directory

(edit: this is old, on Win XP)
I always get the error message Not a TDS-compliant root directory when I try to add a root to MiKTex. And it always takes me forever to figure out how to fix it. What works for me is to put all my stuff in the folder C:\local\tex\latex\ and add C:\local as a root directory.


edit: newer, works on Win7 64bit

1. Put everything here:  C:\Users\<username>\texmf\tex\latex\local\
2. add folder  C:\Users\<username>\texmf to miktex watch list