Hi Adam,
I've downloaded the last file location that Karen sent me a week ago and installed that version in a test folder.
The error is based on the onClick event when try to change to a different folder. When you click on a different folder the insert image window tries to update the hidden form field for the upload path. When the 'editor.Allowupload = false' is set, the ASP code that generates the form field for the upload path is not created. This is fine until you click on a folder and it tries to set the upload path to form field that was never created because I set 'editor.Allowupload = false' in the ASP.
Now either I've been given a link to an old version, or this error really exists in the current code base.
Here's the link to my latest example:
Here a screen capture in IE 6:
Here's the error in FireFox 1.5: