Thanks for the suggestion, the situation is a bit more complicated it seems ...
I have indeed the path you indicated C:\Users\MY_WINDOWS_USER_NAME\AppData\Roaming\Quest Software\Toad for Oracle and inside there is a SettingsLocations.ini which has only one section for 13.1 which is my Toad version. The AppData points to a location on the C drive which exists and I have access to create files there ... I also have an EditorAutoReplace.xml file ... I renamed it and it re-created it, no problem there.
Still, qsr gives the same error message.
To make the story more funny ... I stumbled on the fact that I have also version 12.8 installed on my machine in a different location (same path but instead of Quest it is Dell\Toad for Oracle). There is also a SettingsLocations.ini inside pointing to the same AppData\Dell\Toad for Oracle\12.8 location.
For curiosity, I executed the EXE file from both versions of Toad - the 13.1 fails with this The system cannot find the path specified error, the 12.8 works and opens a window ...
Can it be that because of the 2 versions installed this does not work?