Reproduces with one project (and saw the same error on another project earlier, but can't reproduce anymore with it)
I am not sure, but seems that it reproduces starting since 2017.1a4 (at least can't reproduce on a1 and a2). Reproduces for me on 2017.1.0a4 - b4.
I use Visual Studio 2010 and I am on Windows 7 64b
I have 12Gb free space on disc D (where my project is located)

The project is very big 4.5 Gb, but it is in Collaborate on services, so I can add anyone to the project and you will have ability to download project. But no one from other guys who work with this project can repro this problem...

So, what I am doing to repro it:
1 Open project and try to Build and Run Standalone by pressing Ctrl+B - in this case everything is good and build is started
2 Open any script from this project in VisualStudio
3 Press Ctrl+B

Actual result:
"Create directory" pop up appears and build is not started. Then when I press "Cancel" on the pop up it is closing, but in couple of seconds build is started

Expected result:
there should not be such pop up, at least seems it somehow connected to VS

---please see attached screenshot in comments
- hope logs will help ...