Windows 7: Something corrupt with my Windows?

This is probably one of the most frustrating issues I have ever had. I have no idea what its called, but what I am referring to is the box that opens when you do a "Save As". Its like stuck in my libraries folder and wont recognize any type of other files or even display them within it. The worst part is I cannot even save the file, all I get is "File Name Not Valid"! This is also the case whenever I try to browse to a file through another program, still stuck in the same folder unable to open anything.

Windows 7 Ultimate 64bit SP1

Hi notws, welcome to SevenForums!

I'd like to understand the issue better, so I'm wondering whether this warning pops up as soon as you open the file dialog, or only when you actually try to save a file?

If you simply click OK on the warning, does it then go away? Are you able to browse and save/open files afterward?
If not, what happens instead?

It only pops up when I click save, and when I close it, it goes away. But then when I click save again it pops back up.

i would run sfc/scannow to see if there are any corruptions in the registry.

SFC /SCANNOW Command - System File Checker - Windows 7 Forums

It would help if we knew which process issues this message. Here is how you can find out: Error Message - Where Does it Come From

Right Click on Documents under Libraries and select Properties. Post a pic of the properties. It doesn't look like you have any folders there even though you specified two locations. It could be the folders don't exist.

Actually, does this happen with any filename you try to save the file under? Or just with "image", as shown in your screenshot?
Have you tried typing in "image.jpg" instead and saving that way?

It happens with all formats, it also does the same thing when I try to upload a video through YouTube.