If you have configured a folder to Redirect to Page, then you must also set a front page for the folder. If you don't set a the front page for the folder, this will display the error message that you have not selected a default folder page.
You can resolve this by:
Creating a redirect page for your folder, using the steps in this guide.
Choosing a different display option for your folder. See Step 2 of this guide for the different folder settings available.
Note: Squarespace 5 is our legacy platform from 2012. Although we still support Squarespace 5, fixing bugs or issues is a lower priority for us while we focus on our current platform, Squarespace 7.