1) This is a problem that seams to be introduced in the dw.browseForFolderURL function by Vista SP2 and Windows 7. There are two workarounds for the issue:
a) Browse to and select a folder within the folder you’re trying to select.
b) Manually enter the folder name in the text field that displays the folder URL
2) If you do not set an upload folder, the image will be uploaded to the same location as the page you applied Digital File pro to. for example, if you apply DFP to:
and do not set an upload location, the image will be uploaded to: