Let an amatuer help you here
It seems to me that when the operating system creates a copy of the folder to copy data into, it would have two folders open which have the same name.
The OS would distinguish between the two folders by the device they are on.
Maybe in your case, the two open folders with the same name are not being serialised properly. When TOS goes to read from one folder, it reads from the wrong one, or they both conflict somehow.
Those are the kind of symptoms
you could expect from an IRQ problem. However I guess it's your HD drivers, or something else in memory that is clashing with the HD drivers.
So, bearing that in mind, this is what I would like to know:
1) Is the folder created if you check the floppy afterwards, and it just has no files in it? Or does it crash before it gets the chance to create the folder?
2) Is the result the same when you try to copy an empty folder as with folder that has files in it?
Totally unrelated tests:
Have you tried making a RAM-disk, copying the folder from the HD to that, then copying from the RAM-disk to floppy?
See if there is a difference between creating
the folder in the RAM-disk and then copying to floppy, or copying
from the HD to the RAM-disk and onto floppy.
If folders that are copied to the RAM disk from the HD cause problems while the other don't, maybe the HD driver is reading a bit of formatting information about the folder or something, which confuses the floppy... or something like that
Pretty soon I think you'll have to start playing around in GFA basic or something and start manually creating a new folder with the name of the source folder, and manually copying files across to it.
What could also help is to have some experienced games cracker have a look at what is going on in memory as you drop the folder onto the floppy...