I see this with the Default download location not with the Download podcasts to (but I'm already using a custom location). Added as: http://www.ventismedia.com/mantis/view.php?id=8092

Downloads are non-Podcast files that can be downloaded.

In Options > Download/Podcasts, the default folder is populated with
C:\Documents and Settings\Alpha User\My Documents\My Music\Downloads\<Artist>\<Album>\<Title>

Paste in something else, like "H:\Music\Podcasts\<Title>"
Tab out of the field.
Close the Options dialog.

Reopen the Options dialog.

The original value has returned.

Also, it's not clear (to me) from the UI what the difference is between "Default Download Location" and "Download Podcasts to" in the Global Podcast Options area. Podcast vs. Non-Podcast downloads?

Thanks!