Generally, within EG, you don't use a libary statement directly.
1) use "Assign library..."
or
2) use the "SAS Enterprise Guide Explorer"
both off of the "Tools" menu
or
3) define the libary in your SAS MetaData Server.
All three cases require that "Local" to have been defined as a logical SAS workspace server first, accessing (or defined to) "localhost"
I generally don't recommend using system root as the base directory for the "files" specification/option when creating the server.
When you create the libary, there will be an opportunity to simply browse to the location (folder or directory) on the server.
I hope this helps.