This means you created the folders in the wrong place. To keep from having to clear out the folder prefix every time, log in as root and do this:
# cd /etc/e-smith/templates/home/httpd/html/horde/imp/config/servers.php
# mkdir -p /etc/e-smith/templates-custom/home/httpd/html/horde/imp/config/servers.php
# cp 120IMAPServers /etc/e-smith/templates-custom/home/httpd/html/horde/imp/config/servers.php
# cd /etc/e-smith/templates-custom/home/httpd/html/horde/imp/config/servers.php
# pico 120IMAPServers
change the folders line to '' instead of 'Mail/'. Note that that's two single quotes, not one double quote.
# /sbin/e-smith/expand-template /home/httpd/html/horde/imp/config/servers.php