Re: 404 Page Not found for links
It isn’t that the directory needs to physically exist, because just like WordPress, all permalinks are virtual pointers to PHP interpreted code.
When you’re talking about notifications, are you talking about the emails you receive? Or are you talking about the actual Notifications screen in BuddyPress?
If you’re talking about the later, then it means your plugins_template.php file is missing from the root of your parent theme. BuddyPress still uses that file as a generic pointer for the settings pages to use, since they do not have their own specific template files at this point in time.