Did you try resetting the location to the Desktop after the Big Sur update? If so boot into Safe Mode according to Start up your Mac in safe mode - Apple Support and see if the problem persists and reset if necessary. Reboot normally and check again.
NOTE: Safe Mode boot can take up to 10 minutes as it's doing the following;
• Verifies your startup disk and attempts to repair directory issues, if needed
• Loads only required kernel extensions (prevents 3rd party kernel/extensions from loading)
• Prevents Startup Items and Login Items from opening automatically
• Disables user-installed fonts
• Deletes font caches, kernel cache, and other system cache files
To change the screenshot format from png to jpeg enter the following command in Terminal followed by the Return key/
defaults write com.apple.screencapture type jpg && killall SystemUIServer
Then enter this command again followed by the Return key:
killall SystemUIServer
That should change the type of image to jpg.