"error instantiating class. Cannot find c:\myform\newform" appeared.

As I said, you need to use a relative path from where the form is located. So if the form is located in d:\MyApp\Form and the class library is located in d:\MyApp\;ibs, you need to put this:

..\libs\MyClassLib.vcx

in the classloc field. Note that it must include the .vcx extension.

If you tell me exactly where your forms and class library are located, perhaps I can tell you what needs to go into the classloc field.