Tested using:
File > Save Layers

1) The "Save" Dialog that pops up does not have a way to create a new folder (as you mentioned it should. SCREENSHOT BELOW)
2) The "Save" Dialog that pops up does not let you select a folder (the "Save" button stays greyed out and does not activate)
3) The "Save" Dialog that pops up only continues if you select a file (the "Save" button activates), but the save fails with the same error as before.

I'm a Java programmer too, and I LOVE this program, so feel free to talk to me independently, or we can keep going in here and share the news with everyone as we go.

screen1.jpg