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You can only have 2 library folders so you may have to copy game folders from one of them to your new folder then make the new folder a library.
The windows permissions error is a very old error that's difficult to fix. I had this issue you're describing and attempted fixing the error and...there's just no fixing it. Microsoft hasn't done anything about it in several years either so they're probably not going to. We just have to make new folders so the permissions allow everything because creating new folders is ownership of that folder according to the O/S.
What worked for me was clearing the downloads cache. In steam, go to settings > downloads > navigate down to "clear download cache" and click on it. It will shut down steam so relaunch it and try downloading the game again.
Note 1: When opening steam again, you *may* need to log in as if this was a new device, meaning you'll have to input your password again (and do two-factor authentication if enabled)
Note 2: the game may have to start downloading all over again and not continue from 99%, just keep that in mind.