Dear WilliamC7, This is a software bug in the latest version of toolbox. I have found a work-around. Below you will find the solution to the problem of being unable to save screenshots to your desktop. It worked for me. I hope it works for you too.
I am end user of Toolbox like you. I had the same issue. - I couldn't save Screen captures to desktop. No matter what setting I chose, it would only save a link (to my dropbox, in my case). It was exactly the same problem as you.
First of all, may I congratulate you on your very clear and succinct description of the issue. You certainly out-class the the person who is trying to help you. I didn't feel that they quite got to the bottom of the problem. Saying "It works for me", is not really an answer, and the subsequent suggestions looked like they were grasping at straws, when it is quite obvious that we are dealing with a software bug. I came here because I had exactly the same problem and it was driving me nuts.
Then I found a "workaround" solution. All you have to do is un-check the box "Floating Thumbnail" in your capture above, and Voila! Your images will save to the desktop again like in the previous versions.
By the way, I never had the very last problem you mentioned in your last post "the "Save to:" option will be instantly reverted back to "Clipboard" even before pressing "Done".". I am pretty sure you never had this problem before you started trying to fix the issue. You would have noticed it. It would be almost impossible not to notice it. In my opinion, one of the attempted "fixes" has added to your problems. If that persists, it sounds like you need to check all the fixes again to see if you accidentally unchecked a box. (Sometimes a Mac can be slow in adding a check-mark so clicking twice can add then remove it) .
I hope this works for you. Let me know!