which version are you using?
i have 1.0.9.518, and it works for me,
just make sure you press [ok] in the [Shortcut Settings] dialog after choosing image,
it will not save if you press close button
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edit:i just checked it again, and found what you mean,
i think you have mentioned the folder that will be used to place xlaunchpad shortcuts inside it,
since there are 2 types of shortcuts in xlaunchpad:
1. real folder: that will point to a real directory
2. folder for shortcuts: that will be a place for xlaunchpad shortcuts
as i said above, the first one is working correctly,
but for second one, i can confirm that there is a bug with it
as a temporary solution: you can manually change the icon from the icons folder where located in:
Code:
[yourXlaunchpadFolder]\AppData\Shortcuts\Icons\Folders\