Karl,
when you select the root directory, it can be either your existing workspace of ME5.1 or any folder that contains your project folder. This way you can import the projects from one workspace to another.
Optionally you can directly point to your existing workspace from the workspace launcher but this ‘may’ cause compatibility issues. You may have to take a backup of your existing projects to ensure that the projects before upgrade remain unaffected.
Let me know if that helps.