The AlwaysCreate makes sure that the folder will exist, even if you don't put files into it. Here is a link with more information:
That means that you shouldn't need to set this for either folder, since they will always have files inside them.
If you need further help with creating a setup project, this article should help:
Visual Studio Windows Application Setup Project
I know it is a bit old, but all of the setting seem to be the same as they are in 2010.