Setting single output location for multiple files in ModelBuilder?

This page on Esri's site should give you all the information you need to do this within ModelBuilder. Essentially you create a variable for the output folder/geodatabase -- which can be user-generated or hardcoded -- and then call it in the other tools by its name, surrounded by % symbols.

First create a script and define the input feature class and output workspace path parameters. Next, export out the model to python script or vbs. Then, you can just edit the code to use the output workspace variable for all the intermediate tools based on the original output workspace that the user defines.

The example below illustrates this using arcpy, however you will have to use just python or vbs since you are using version 9.3.1 and not 10.

e.g.

    inputlayer = arcpy.GetParameterAsText(0)
    outputpath = arcpy.GetParameterAsText(1)

    # Process: Buffer
    arcpy.Buffer_analysis(inputlayer, outputpath + "\\buffer.shp", "50 Feet", "FULL", "ROUND", "NONE", "")

    # Process: Select
    arcpy.Select_analysis(outputpath + "\\buffer.shp", outputpath + "\\bufferSelect.shp", "")