Oh for crying in a bucket: 5 years later this is still an issue!!
In Default Template > Folders and Cache tab > Cache Directory, set value to %drive%|B:
In Location > General tab > Script and Template Variables area > Drive field, set value to \\SERVER\software\LTCache
In Agent within Location > Effective Policy tab > Templates section > Cache Directory entry, check value: itis \\SERVER\software\LTCache|B:
In Agent > CMD Prompt tab >"Net use" > get response X:\ is mapped to \\SERVER\software - wtf!!!
aaaahhhh!!! all because Drive was \\SERVER\software\ltcache. Made a new share of same folder, changed Drive to \\SERVER\LTcache and bingo! all sorted, Agent > CMD Prompt tab > "Net use" > get response B: mapped to \\SERVER\LTCache