You don't have "Put In Subfolder" checked.
I suppose he wants it to be in Z:\ All Photo Reorganize 2012\EMAIL admissions 2012 and they are in Z:\ All Photo Reorganize 2012.
Am I right ?
The subfolder is the folder I selected in the dialogue. c.frans w is right. In 2.7 I never had to check and create a subfolder, which is what that box is for, unless I wanted to. Usually I just select the folder I want, but in 4, when I do that, it jumps to the next higher folder.