First off, no, there should not be 2 folders.
Second, take a look at the services - if they're pointing to the folders on C:\sbs, they need to be modified to point to the other one. NOTHING will work without all the folders in the task handler directory.
hmmm...
Something is messed up there. I don't know how that other folder was created, but check a few things, like the services and maybe the registry and see if you can point it all back to the right location. Check the file versions and see if they're updated in the right location or not.
Start with that, and let's see how far we can get to success. if not, we may need to rebuild... something.
That's really weird.