Outlook 2016 - Can the default location for "Look in" be changed to "User Templates in File System" when choosing a template?
I did a lot of testing and research, but I didn't find a way to change the default location displayed of "look in". But as far as I know, it is the most convenient to double-click to open the mail template.
If you like, as a workaround, please try to save the template on your computer desktop or in a frequently used folder, and then each time you want to use the template, just need double-click to open the template.