I recently bought WC3 and installed it on my machine. The first time I ran it, it worked properly, but now, every time I start it, it goes into setup mode. Running the setup with default settings seems to work fine, but one the last question - what directory to use for the save file - the game crashes, because it is unable to create the directory. Actually, the C:\WC3\ directory already exists, having been created either by the games first run, of the installation file. Does anyone have any suggestions for either correcting the "create directory" issue, or for preventing WC3 from going into setup mode when it is run? (I don't have the "-i" flag set on WC3.exe)

I am having this same problem. It had previously worked fine. The only thing I have done recently is I installed WC4, and now this problem has appeared. Looking into the dosboxwc3.conf file, dos box mounts the present working directory "." but fails, image mount successfully mounts the cdrom image using .\data......something. going into dos box and trying to mount the c drive manually, it doesn't see the folder. I had to add my actual user account to the security settings for the folder and give myself full control. This allowed me to actually mount the folder. Once you have full control permissions, the game checks its setup file, and everything checks, so it just launches without issues.
I also listed the full path in the .conf file for the mount of C drive

Same here, i 'fixed' it by reinstalling the game every time i want to play. the savegames persist and the first time playing after reinstallment you can save any time you want. But when you quit you have to reinstall