"Lepiej tego nie rób" doesnt work??
It's the main answer, actually.
Does this work in Polish?
Yes, it does.
Why are there two options for this?
Probably one is singular and the other is plural.
why "lepiej nie róbcie tego" is wrong?
Feels a bit less natural to me, but more or less okay. Added.
"Lepiej tego nie rób" nie zadziałało.
"Lepiej tego nie róbcie" also doesn't work. "Wy" is not necessary.
Both are the starred answers, actually... geez, the number of such comments, clearly indicating some bugs in the system, is growing and that's really worrying :/
In correct English one would say 'You'd better not do this.' 'You better ...' is wrong as the modal verb is not expressed properly. The incorrect form has arisen because language is learned by being heard, and sometimes the d of You'd is missed.
Why does "Lepiej tego nie zrób" not work here?
If you are supposed not to do it, you should not do it at all. "zrób" is perfective and refers to doing something once and succesfully. It does not make much sense here.