@imrich. I don’t know what could be causing your problem. I just tested it in my copy of Joomla 1.6.3 and it works as expected. one thing to keep in mind, after you create the new folder in the root directory, please remember to come out of the Module manager by clicking ‘Close’, and then go back into it. You should see it updated then.
It is not too difficult to figure out how to change the root folder. You are free to edit the code as you see fit. There are a number of ways to do it. The easiest and quickest way is to edit the xml manifest file. See the following for assistance: http://docs.joomla.org/Folderlist_parameter_type