The bug seems to be around function gtk_file_chooser_default_should_respond in gtkfilechooserdefault.c:

Around line 7565 there's:

      check_save_entry (impl, &path, &is_well_formed, &is_empty, &is_file_part_empty, &is_folder);

      if (is_empty || !is_well_formed)
	return FALSE;

      g_assert (path != NULL);

      error = NULL;
      if (is_folder)
	{
           [...]
	}
      else
	{
	  gboolean file_exists_and_is_not_folder;

	  file_exists_and_is_not_folder = g_error_matches (error, GTK_FILE_SYSTEM_ERROR, GTK_FILE_SYSTEM_ERROR_NOT_FOLDER);

Clearly there's something missing here.  check_save_entry() appears to do a file test, among other things.  Then we have 'error = NULL', followed by an if (is_folder); the file is not a folder, so the else branch is executed, containing:
    file_exists_and_is_not_folder = g_error_matches (error, GTK_FILE_SYSTEM_ERROR, GTK_FILE_SYSTEM_ERROR_NOT_FOLDER);

But error is always NULL, so file_exists_and_is_not_folder is always FALSE.  I don't know the original code, but I suspect error should have been set by check_save_entry before some code refactoring that went wrong.

Yeah, that code got broken with the changes to make the file chooser asynchronous.  We have a test in autotestfilechooser; I need to finish fixing the bug :)

[It's partly an API problem with GtkFileChooserEntry - fortunately we can change it since it's only an internal widget.]

*** This bug has been marked as a duplicate of 347883 ***