When MP3 Diags is first started, it will prompt you to choose which directories you want it to process. Its configuration options are stored in an ".ini" file. Usually there will be a default name already filled in, which is operating system - specific. If you want a different name (or if there is no default), you can choose something else, by clicking on the button at its right. After you press OK, the scanning process begins. It will create another file for storing the details about your MP3 files, with the same name as the ".ini" file except for the ".dat" extension.
Note that you don't need to create or set up the ".ini" file, but merely to choose a name for it if you don't like the default or if there is no default. Actually it's supposed to be the name of a new file, one that doesn't already exist. MP3 Diags will fill in all the details.
Note about network access on Windows
It may not be immediately obvious how to access MP3 files that are not on the local computer. Currently MP3 Diags can only open files from some "drive", which has a drive letter (C:, D:, ...), and there are no plans to support "\\Computer\SharedFolder" naming.
What you can do is map a network drive, so you can see the files on "\\Computer\SharedFolder" as files on G: or whatever drive letter you choose. Then MP3 Diags should be able to open your files by using this new drive. Search the web for the actual details about how to map a network drive on your particular version of Windows.
If you have something to say about this topic, you can add a note at https://sourceforge.net/p/mp3diags/tickets/34/. You may also want to look there if this doesn't seem to work. For example, one post describes how you may have to run the program in Vista SP2 compatibility mode under Windows 7 in order to see the network drives.
Suggested usage 
