Jason and crew,
I have run into a similar bug as well (on Mac Snow Leopard too) but I found out after applying SHA1 encryption what was going on. For some reason Security Assist will put the Security Assist helper folder up one level outside my public html folder. Very strange.
So, in my case, it actually is creating the folder and files - but it is putting them outside the public html folder.
For example, all of my sites follow this hierarchy:
SITENAME
Assets & public_html
After running a Security Assist function, I now have
SITENAME
Assets - public_html - Security Assist Folder
--------------------------------
Took me forever to figure out what was going on with it, but that seems to be it.
Best regards,
Brian