... or try:

SET LIBRARY TO ( HOME() + ".\FOXTOOLS.FLL" )

or

local lcTools
lcTools = home() + ".\foxtools.fll"
set library to (lcTools)

The idea being, of course, to not assume that foxtools.fll is in the path, but to have specific knowledge of its location and express that in the string. Furthermore, if the quotes are presenting a problem then the parenthetical expression forces VFP to evaluate the contents of the expression prior to handing off the value to the SET LIBRARY TO instruction.