I finally managed to use a flow variable to define the output path within the XLS writer. I initially just tried to add he correct variable via the variable settings button. This resulted in a pop up error saying "Invalid settings: Please specify an output filename".
I have just done that of course by choosing a variable!!
The way to get around this is first to enter any old text in the selected file box before choosing the variable from the variable settings.
I thought I would like to share this incase anyone has the same problems and with the hope that the KNIME team can exterminate this bug ;)
I see what you are talking about, and agree that this probably isn't the best way for the for the dialog to work. I've logged a ticket and flagged this post so we can talk about when/how to fix this.
You are correct, this is not limited to a specific node (not even just readers), but is a more general design consideration that has to do with how the Flow Variables tab is constructed programatically. Thanks again for the feedback.