If an entity has been selected for Sharepoint via CRM 365, when viewing a record within CRM, the first time you view the Document Associated Grid (please see image) an automatic folder is created for that record in the format of (name_guid) in Sharepoint.
Is it possible that the automatic creation of the folder in Sharepoint can be disabled or switched off or another 'default' location may be used as the Document Associated Grid is viewed for the first time?
There is no way to tweak this configuration in any supported OOB way or without code.
What you can do is, instead of waiting for OOB system to create a default folder when the CRM user navigate for each record (ex. Microsoft_xxxx) under the entity (schema name, ex. account) folder of the configured SP location, you can write a C# plugin or custom Workflow or Power Automate (anyway Microsoft planning to retire CRM workflow and moving towards this. aka MS Flow) to create the desired folder under the desired location whenever the new record is created.