I've ran into the same problem, as I am using a store downloaded python for windows version.
I've found a folders menu in the octoprint configurations where you can change the folders for timelapses and other features. In other words, you can change the default path for the one where your octoprint folder actually is.
Somehow, it recognizes the C:\Users\XYZ\AppData\Roaming\Octoprint\ folder as if it was the default path and, therefore, sends the files to the installation path as a default. However, our installation path is in the form C:\Users\XYZ\AppData\Local\Packages \PythonSoftwareFoundation.Python.3.8_qbz...\LocalCache\Roaming\OctoPrint\ and the files get sent there. It seems not to be a problem until Octoprint tries to render the timelapse through FFMPEG and uses the actual C:\Users\XYZ\AppData\Roaming\Octoprint\ folder that's in the folder menu.
This means that you should change all C:\Users\XYZ\AppData\Roaming\Octoprint\ folders to their actual path, C:\Users\XYZ\AppData\Local\Packages \PythonSoftwareFoundation.Python.3.8_qbz...\LocalCache\Roaming\OctoPrint. Eventhough it will mostly change nothing, it will allow the FFMPEG to use the correct folders for rendering.
The thing is that actually changing it can be tricky. Sometimes you might change the folder's path and save, but it will not get stored in the config.yaml. In general, the configurations panel will close when it is able to save the configurations. If it's not closing, try refreshing the octoprint page and trying to change the folders again. This worked for me for every folder except the one that really matters, the timelapse_tmp.
To be sure the changes were saved, open the config.yaml file (it's a text file, might be opened with notepad). There should be a section named folders where the non-default folder paths are stored.
As I've said, I managed to change all paths through octoprint folder config menu but the timelapse_tmp. Then I manually inserted the folder path I wanted ("timelapse_tmp: ...") and saved the file. The purpose of it was trying to force octoprint to read the desired path even if it was not able to save it for some reason. For the changes to take effect I restarted the server and checked if the folder menu was correctly updated.
Now I have just finished my first sucessful timelapse after running into this problem and this is the only fix I tried until now, so hopefully it should work for you too.