rewrite problem

I have a forum on my site called arcade.

Now that vbseo is on, it make the link to that forum

http://www.gamerzneeds.net/forums/arcade/

this however tries going to the actual folder arcade instead of the forum

Thus why I needed to create a blank index.html folder to keep them out of the folder.

Should I just change the name of the forum, Or should I change settings in vbseo?

Yes, you would need to change the name of the forum, since renaming the directory would cause issues for the arcade script most likely.