On an HTTP or UNC distributed repository, you must enable the folder for sharing across the network, so that your ePO - On-prem server can copy files to the repository.
On the managed system, locate the folder you created using Windows Explorer.
Right-click the folder, then select Sharing.
On the Sharing tab, select Share this folder.
Configure share permissions as needed.
Systems updating from the repository require only read access, but administrator accounts, including the account used by the ePO - On-prem server service, require write access. See your Microsoft Windows documentation to configure appropriate security settings for shared folders.
Click OK.