You've got a couple different things going on with the Launch subroutines. After I commented out the single folder routine and de-commented the multiple folder, I saw that the LaunchAndRename subroutine wasn't defined before the Launch Hotkey. The commented out Launch Hotkey for two folder locations doesn't have a reference anywhere for argument %1% {SendPC} in the commented out LaunchAndRename command. It's also trying to reuse the %1% argument for the path.

Overall, I don't really like the Launch setup in the default starter script. It does tend to cause problems for some people. I have a guide in my sig for Configuring a HotKeyNet Starter Script that explains in detail what's going on with the commands in the default script, how to modify it and goes into a more reliable Launch setup, specifically designed for launching from multiple locations. It also includes a ResizeAndPosition command that automatically adjusts the sizes of the windows and lays them out on the screen in a predefined location. You might want to take a look at that guide. It's pretty lengthy, but I've been told it explains things pretty well.

This is a modified version of what my Launch subroutines look like. It includes your pathnames and selected hotkey so you can see what goes where. You will need to input your own password and reconfigure the ResizeAndPosition as described in the guide I linked.

Code:
//----------------------------------------------------------
// 	SUBROUTINES FOR WOW
//----------------------------------------------------------

//----------------------------------------------------------
// 	WoW LAUNCH AND RENAME
//----------------------------------------------------------

<Command LaunchAndRename>
<SendPC %1%>
<Run %2%>
<RenameTargetWin %3%>
<RemoveWinFrame>
<wait 500>
<text %4%>


//----------------------------------------------------------
// 	WoW RESIZE AND POSITION
//----------------------------------------------------------
<Command ResizeAndPosition>
	<SendPC Local>
		<SendWinM %1%>
			<SetWinRect 0 0 1920 1050>
				<SetWinRegion none>
		<SendWinM %2%>
			<SetWinRect 1920 0 480 270>
				<SetWinRegion none>

//----------------------------------------------------------
// 	WoW  LAUNCH HOTKEY 
//----------------------------------------------------------

<Hotkey ScrollLockOn Ctrl Alt L>
	<if WinDoesNotExist WoW1>
		<LaunchAndRename Local "C:\WoW1\Wow.exe" WoW1 PASSWORD>
		<endif>
	<if WinDoesNotExist WoW2>
		<LaunchAndRename Local "D:\WoW2\Wow.exe" WoW2 PASSWORD>
		<endif>
<ResizeAndPosition WoW1 WoW2>


//----------------------------------------------------------
// 	DEFINE BASIC KEYS LABELS
//----------------------------------------------------------

//----------------------------------------------------------
//				TOGGLE HKN MUTE
//----------------------------------------------------------

<hotkey Pause>
	<sendpc local>
		<ToggleHotkeys>



//----------------------------------------------------------
//				DEFINE LABELS
//----------------------------------------------------------

<Label w1 Local SendWinM WoW1>
<Label w2 Local SendWinM WoW2>