Files, which can be downloaded from your site, can be saved outside the public_html folder. This is needed e.g. in case you want to allow downloading for registered users only. In such case you should set the access right of the files to registered users and you should save the files outside the public_html folder, so they cannot be accessed by not registered users.
Go to Components - Phoca Download - Options and set the absolute path in Absolute Path input field.
then your path will look like the following path:
If you will use absolute path for saving files which should be downloadable by Phoca Donwload, you cannot set the Direct Link parameter for downloading files. Because files outside public_html cannot be accessed through direct link.
If you will have problems to access the files on the server (try to disable/enable FTP layer in your Joomla! Configuration).
Full path on your server can be different, try to see your Joomla! global configuration, you can see the paths there. Or just try to see your FTP settings.