The restore executing user doesn't have permissions on that folder. I had the same issue earlier when I attempted to backup a database to the F: drive. Copy the files to %SQL_HOME%\Backup and try to do it again, it should work then.

Edit: It's either a problem reading the file or the location you're specifying the new data files to go (by the fact it says "create").

Try a restore verifyonly on the datafile to identify which part of the restore you're having problems with (if the verifyonly is successful then it's the creation location).