Set transformations image path
Craft doesn't have a setting for defining the transformations image path, they are automatically placed in a subfolder inside your created assets source' path. It could look something like this _960x540_crop_center-center_70, if you had a transform like this:

{ width: 960, height: 540, mode: 'crop', position: 'center-center', quality: 70 }


By default, the url you're seeing is what Craft will return if the transform hasn’t been generated yet. The next time the page is loaded, it should reference the actual image file. See Brandon's answer here, for a more thorough explanation.

But, if everything is working, you should see the image in your browser even if it returns the transform url. If the image isn't created, check if the file path for your asset source is correct (guess it is if you can upload images), and that url rewriting is working.