Onde você está configurando a variável copyTo
está fora do loop, então sempre usa apenas o valor da pasta em D1. traga colD=...
e copyTo...
dentro do seu loop (em algum lugar depois de x=x+
e ele deve funcionar melhor.
Option Explicit
Sub copyTemplate()
Dim lRow, x As Integer
Dim wbName As String
Dim fso As Variant
Dim dic As Variant
Dim colA As String
Dim colB As String
Dim colSep As String
Dim copyFile As String
Dim copyTo As String
Dim colD As String
Set dic = CreateObject("Scripting.Dictionary") 'dictionary to ensure that duplicates are not created
Set fso = CreateObject("Scripting.FileSystemObject") 'file scripting object for fiile system manipulation
colSep = " - " 'separater between values of col A and col B for file name
dic.Add colSep, vbNullString ' ensuring that we never create a file when both columns are blank in between
'get last used row in col A
lRow = Range("A" & Rows.Count).End(xlUp).Row
copyFile = "C:\Users\User\Documents\New folder\BackupDocs.xls" 'template file to copy
x = 1
Do
x = x + 1
colA = Range("A" & x).Value 'col a value
'colB = Range("B" & x).Value ' This line is overwritten by the next line so delete
colB = Left(Range("B" & x).Value, 20) 'only retain first 20 characters
colD = Range("D" & x).Value 'Folder to save to
copyTo = "C:\Users\User\Documents\New folder\Excel Test\" & colD & "\" 'location where copied files need to be copied
wbName = colA & colSep & colB ' create new file name
If (Not dic.Exists(wbName)) Then 'ensure that we have not created this file name before
fso.copyFile copyFile, copyTo & wbName & ".xls" 'copy the file
dic.Add wbName, vbNullString 'add to dictionary that we have created this file
End If
Loop Until x = lRow
Set dic = Nothing ' clean up
Set fso = Nothing ' clean up
End Sub