Trying to replace current cache server with a new one, how to configure the storage area?

Can't you edit the original storage area definition instead of creating a new one? If you create a new one all the files in the database will think they are in the old storage area still and won't work.

you should be able to change the host name & path on the original definition.

I don't think you want to do this, but the way around your error is to on the cache server rename the last folder in the path,then create the storage area, it will create that folder, it will be empty. Delete the folder it created, then rename your original folder back to the original name.

yes, I was able to rename the original storage area. I have changed it to the new storage in the new server and it looks ok but not sure if the storage area is successfully connected or not. I tried deleting a test file and the file is still present so maybe the syncing hasn't actually kicked in and might need some time. I'll carry out more tests and see if everything is working fine.