Creation of old folder
The first download for each Firefox session opens the download dialog box with a folder that I have deleted as the initial download location, and if the folder no longer exists (which it doesn't because I keep deleting it), Firefox creates it. In the dialog box, I navigate to the folder I need, and from there on during that session, the download dialog goes back to the last folder. The next session, though, the first download reverts back to that deleted folder and creates it if it doesn't exist.
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What are your settings on the General page under Downloads?
Note that you need to disable the 'always ask' setting for download to be able to change to default download folder. This default download folder is always used, even if you use the 'ask' setting unlike previously when the temp folder was used.