Backup location handles the backups, not where the project is saved. That was specified when you created the project. So where did you tell it to put the project when you created it?
To change the save location, use Save as…
I am having a similar problem, only since I installed Scrivener 3.
The error message suggests doing a Save As to a different location. I did this, but renamed the file and saved to the same location, and it worked fine for a while. Then it started giving me the same error message. This did not happen while I was using any of the beta versions, and my storage is NOT full.
Well, you never thought of doing as the error message said, and saved to another location?
Where are you saving the project? To the same folder where Scrivener saves the backups? To the same folder where Scrivener is installed?
There’s nothing wrong with the location - if there was, why did changing the name the first time I tried it work for a while? It cannot be a coincidence that this happened when I started using Scrivener 3.