I don't use TTools any more because I have moved from FS2004 to FSX years ago. I didn't remember how TTools was used so I dragged it from it's nest (somewhere on the backup HDD) and tried.
TTool's File menu has following options:
Locate Flight Simulator...
Default Source Folder...
User Defined Source Folder...
FS2002 Traffic Folder
FS2004 Traffic Folder
User Defined Traffic Folder...
Exit
If TTools doesn't find Flight Simulator (FS2004 or FS2002) during installation, one can find the Simulator's main folder manually using "Locate Flight Simulator..." option. All those options there are three periods (...) at the end let you choose. Because you said that you are using FSX, TTools doesn't find the FSX's Traffic Folder automatically (there was not such a thing as FSX when TTools was made). You have to use option "User Defined Traffic Folder..." and show the right folder for TTools manually.
However I don't recommend using TTools with FSX at all. Why? TTools makes FS2004 (or FS2002) compatibele traffic files. Those are not 100% compatible with FSX! If one uses
only FS2004 compatible traffic files, everything seems to work ok. So they work naturally while using
only 100% FSX compatible traffic files too. This isn't the situation when you are using FS2004 and FSX Traffic files mixed together. You'll loose all or part of your FSX traffic! Only for FS2004 made traffic shows up.
So I recommend that with FSX you'll start using some other traffic program that makes FSX compatible Traffic files. A good on is AIPF2 and it is free. One can download it here:
http://stuff4fs.com/newpage.asp?Folder=AIFP&JS=true . The download link is at the end of the page.
Pekka
Edit: You can compile your for FS2004 (TTools) made traffic files to FSX mode with AIFP2 too or use the old source files and compile them once again with AIFP2. One doesn't have to make them from scratch.