It is. Every time I change the attribute, it switches itself back.

EDIT: My error. Read-only isn't checked, it has a green box beside it. I suppose that means some of the files in the folder are read-only, while others aren't. But still, applying "not read-only" to the whole directory doesn't seem to be sticking, for some reason.
EDIT EDIT: Maybe not. I have no idea just what that 'green box' symbol means. Every folder has it--even freshly-created ones. I think it means that directory can be indexed by the system for rapid searching. If that's the case, I doubt it's interfering with FS2.
I can run 3.6 without any problems. It doesn't seem to have any qualms about creating a flag file. But the latest builds do.