Error creating new levels

Whenever I try to make a new level, regardless of the name, I get an error saying "Directory Exists". Help?

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It's a weird error indeed. Have a look at your Worlds folder and see if there's anything unusual in there first, and eventually delete them. It could also have something to do with your OS or the place where you installed Knytt Stories. You could also try and see if reinstalling the game solves the problem (just remember to backup any levels you may have made).

Do you perhaps doubleclick the button to make a level, so it tries to make it twice?