OK...Got it to work! Called Blackberry Technical Support, and they had me do some different steps. Might be helpful for others, so here it is:
1. Get into the Command Prompt
2. type in "osql -E"
3. you'll get a "1>" type in "use besmgmt" or specify your database name
4. you'll get a "2>" type in "go" and hit enter
5. UPDATE ServerConfig SET BESOnlyMessages = 1 WHERE BESOnlyMessages = 0 and servicename = "Server_Name"
6. Type in "go" and hit enter.
You need to stop and restart the BB services to get this to work after you run the command. The SQL server must be on the same box as your BES. To change the name of the new folder you have to set it through Desktop Manager for each user
That's the only pain. Hope this helps someone else...