Just an update on this. I did some testing and figured out that the Folder Picker issue only happens when launched from an sp-button. Using a native HTML button, it works just fine.
With the sp-button, it gets stuck in an endless loop of the “click” function. It will continuous loop through the entire click function. In this example, it pops up the folder picker dialog and then updates the UI with the folder path. It continues to pop up the Folder Picker and every time it will update the UI every time too. I also tested by putting other steps in the function to confirm that it will always continually loop through the entire click function.
Here is my function. Again, this works from a regular native HTML button. The issue only occurs with the sp-button.
Hope this info helps. If this isn’t the right forum to post bugs for UXP then let me know where to post 
// Note: Source Folder defined as global at the beginning of the JS file
var saveFolder
document.getElementById("btnSourceFolder").addEventListener("click", async function (){
sourceFolder = await require("uxp").storage.localFileSystem.getFolder();
if(sourceFolder.name.length>40){document.getElementById("sourceFolderName").innerHTML="..."+sourceFolder.name.substring(sourceFolder.name.length-37,sourceFolder.name.length);}
else{document.getElementById("sourceFolderName").innerHTML=sourceFolder.name;}
});