For the "AVR Header Files" path I'm told to specify the directory containing avr/io.h include file. As there is such file in c:\avr-toolchain-windows\avr\include\avr (and it's the only one of that name) I choosed this path (see attachment). Although the dialog still says "Path is invalid".
I installed the AVR toolchain from this Github project.
Environment
Eclipse Photon 4.8.0 with avr-eclipse 2.4.1 on a Windows 10 machine with Java 1.8.0_201.
Diff: