You should be able to set the installation directoy to anywhere on the PC. You CANNOT change a couple of small elements - namely that the lcfd install also places files in %SYSTEMROOT%\system32\drivers\etc\Tivoli which need to be in that directory specifically.
So you may be seeing a problem with any security limitations on that directory, not with the install path.
I have installed lcfd (manually and via automated installer) to a number of directories without issue.
That's the short answer based on a guess. If you list out the problems you are having, it might be easier to offer suggestions.
Leon