When creating a multisite, the sub-folders option is not available

From the Codex article Before You Create A Network:

You cannot choose Sub-directory Install (for a path-based network) if your existing WordPress installation has been set up for more than a month, due to issues with existing permalinks.

The easiest solution is to export your existing site (if it’s got content you want to preserve), install a fresh WordPress Multisite installation, and then import your existing content into the new site.

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