This can be one of two things. the most likely issue is that File Thingie doesn't have write permissions in the currect directory. Login to your server and CHMOD the directory to 777.

If that doesn't help check if your server is running PHP in safe mode. File Thingie is significantly crippled if that is the case. One symptom is not being able to create subdirectories. Switch off safe mode and you will be able to create subdirectories.