In the third step of the New Replication Task wizard you should define the location and datastore for VM replicas. Here, you have to first define the ESX(i) Host by selecting one from the drop-down list. Then, select the Resource Pool on the destination ESX(i) Host and destination datastore.
New Replication Task, step 3 "Select location and datastore for replica"
Define the Replica name's Suffix to be used when creating the VM replica. The default replica name is "%Machine_Name%_vmpreplica", where "%Machine_name%" is the original VM name which is being replicated, and "_vmpreplica" is the Replica name's Suffix. If a VM with such a name already exists, you'll get a warning prompting you to change the name suffix.
Upon making the selection, click Next to proceed to the next step.