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Moving the Favorites Folder
As long as you use Windows Explorer to move the Favorites folder, Windows will update the internal fields that identify it. Suppose the current Favorites folder is C:\Windows\Favorites. Right-drag this folder to the location you want to use instead, and choose Move here from the menu that pops up when you drop the folder.
Otherwise you can edit the registry and navigate to HKEY_CURRENT_USER\Software\Microsoft\Windows\CurrentVersion\Explorer\User Shell Folders. In the right-hand pane, the value named Favorites should contain the full path for the Favorites folder. Double-click it and change it to the correct location.