So first, the actual problem was caused by choosing a reserved name for a content repository folder, so this is not a bug in application-add, it's in your choice of folder name. I take it this restriction and especially its reason for being is not documented somewhere?
Having said that, why would the folder name for a -content repository- folder be restricted when the restriction is on the name of an -operating system- directory? Or, is this a restriction on both either for the same reason or for separate reasons?
-Jim