I did the whole process again with the latest beta build (21) of Form Builder.
I first uninstalled everything to ensure that I would not have any remnant issues from the previous build or other settings.
After the installation of Form Builder, I made sure to delete the cache.
When running the tests with just Form Builder, everything worked great again.
After reinstalling HTML Editor 3, I got the same issue on the Form Builder test as previously with Beta 20.
To illustrate what is happening, after initiating the Simple Contact, here is the screen:
Then after switching the comments to an instance of HTML Editor 3 and then hitting "apply", you will notice that instead of an HTML Editor preview holder, it simply makes the comments text area wider.
I then tried to navigate to the folder you suggested, but that path doesn't exist exactly as you have it stated.
In the configuration folder, I found the preview file to instead be located at: Configuration/WAPreview/wafb.htm
When I opened that file, here is the screen shot of what is happening there:
I will be around all weekend and early next week if you need to run any more tests to help get this worked out. Just let me know.