I find its better to put the CHD's in a CHD folder and use the mame paths to point to them. You must keep them in a folder with the right name.
so for example:
C:\mame\roms\kinst ( rom here )
C:\mame\CHD\kinst ( chd here )
or
C:\mame\roms\kinst ( rom here )
C:\mame\roms\CHD\kinst ( chd here )


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