Hi Kevin Graham,
I'm glad that you were able to resolve your issue and thank you for posting your solution so that others experiencing the same thing can easily reference this! Since the Microsoft Q&A community has a policy that "The question author cannot accept their own answer. They can only accept answers by others ", I'll repost your solution in case you'd like to accept the answer.
Ask: Exercise - Create and run a simple flow - error with SelectedFolder
Solution: The instructions for creating the flow don’t clarify that some fields need variables with % signs around them. It seems like just the variable name was typed in. Once you replace those variables by clearing the field, clicking 'x', and selecting the variable from the list, everything works.
If you have any other questions, please let me know. Thank you again for your time and patience throughout this issue.
Please don’t forget to Accept Answer and Yes for "was this answer helpful" wherever the information provided helps you, this can be beneficial to other community members.
Thank you.