Just create a empty folder named video or movie in your documents folder and point mediaportal to it, does not matter if there is nothing in it at this moment, as you may wish in the future to convert recorded TV and move to the new folder.
That's what I did. But is it a bug? Does it happen to everyone?
Picture Folders and Music Folders doesn't have the same problem but there MP has added a Pictures and Music entry pointing to C:\Users\<user>\Music (in Vista) beside the DVD drives. Perhaps that's the problem? There is no C:\Users\<user>\Movies by default so the setup isn't allowed to add it?
Also if I leave only the DVD drives in Music and Pictures I get the same "No folders specified".
Mediaportal 1.6 add drives that is NOT added in the configuration to "Videos". I can se a G: and an H: which are two external drives. I have every option unchecked in the configuration and as I said, these are NOT added in the configuration but still shows up.