In V7 and V8 the options for where the output layer(s) of IntersectTwoSets is still present in the command line and the Help files, but no longer functioning. The output IntersectTwoSets always resides on the active layer. This is a reversion to the behavior the command in V5.
Not fixed yet in BETA (8.0.23283.13003, 2023-10-10), though not claimed to be. @dan Will the fix be incorporated in a future BETA release, or does the RH-77288 need to be reopened?
Looking closer at this, it appears that the fix was never merged into the 8.0 branch…which is partly “by design” as well as a bit of an oversight (in my opinion). It should be in 8.1 though.