Using WMP you cannot set the RIP directory. Probably because it was set to a network location or a removable such as a disk-on-key.
On WMP's toolbar "Organize" -then "Manage Libraries" then "Music". Select any folder path that does not exist and click "Remove".
See Allan's answer for more information here: http://answers.microsoft.com/en-us/windows/forum/windows_7-sound/have-lost-the-ability-to-rip-music-with-win7/a1d9f4f8-1e7f-40b8-9c49-03ed907f0af3
I'm posting this becuase it was far from the first hit in a search.