I'm a linux guy and encountered this while setting up IDEA community on windows (which probably is the same for android studio)..

You can find where your sdk is located by looking in the "settings"

The "skins" folder you're looking for is in the android sdk folder, for me was "C:\Users\Rob\AppData\Local\Android\Sdk"

(For noobies, make sure you have "hidden" unselected in properties if you're searching with file explorer) and look for "skins" folder

copy+paste the directory into the field

Maybe ask chatGPT which folder you can pick (if you're a little lazy like me). I'm using pixel so I chose the confusingly named WXGA800