User.sel is a sort of database file created by SuSE, in the users' home directory (/home/<username>/user.sel), or wherever you choose to have it written. It's a database of installed files/applications. Anytime you use YaST to install/remove applications, that database is used to show what's installed (check marks in the boxes). The check boxes without check marks are not install yet.
It's either asking you for the location of the file (if installation isn't complete it doesn't exist yet) or it's asking you where to write the file (just say ~/user.sel, or /home/<username/user.sel).
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