@tfry. It seems from your screenshot that something must have changed in the latest version of Joomla that affects the way the folderlist field works on IIS systems. This issue is not the result of my code, as I have no control of how the built-in folderlist works. The folderlist is not supposed to list an absolute path. It is supposed to look like this
And notice I am using Joomla 3.6.4 on my test server. My test server is not IIS, but my point is that this is built-in Joomla code. I would have to try and replicate the problem on an IIS server, and then post a fix on github and make a pull request for the next Joomla release.