Hi,
In my case, in my text were included "?" symbols, and I wanted them to be removed, but instead it were replaced by "_".

Please add in Options:
In a case there is an invalid character, the program will replace it with this string:[_____]
(_ by default)

I didn't try yet the new ImagesToIcon,
but I did some tests, and I figured out that, if you edit the desktop.ini file within the created folder, you will be able to move/rename the created folder as you wish.
You need just to remove the path part like this:
From
to

Another thing to add, a suggestion, you can make 2 checkboxes:
[ ] Create a folder
[ ] Create a FolderIcon.ico

If user check the both 2 checkboxes, it means you need to create 2 icons:
1 hidden icon for the new created folder, within the folder like the file desktop.ini
and
1 not-hidden icon as FolderIcon.ico

It's always better to have an open-source code, for customization.

As you have already understood, the new icon will consist of three layers.
1. Folder png [256x256]
2. User Image [Resized to: ???][I don't know what's default. It will be advanced if the user will able to decide on resize and location X Y Z]
3. Flip png [256x256]

I think it will be better to give the user the default folder pngs: 1. and 3.
so that he will be able to replace the 1. and 3. layers with other folders templates.