Downloading photos with Image Capture

You might try to quit Image Capture.app, then open ~Library/Preferences and move the following files to the Desktop (I am on macOS 13 so YMMV):

com.apple.imagecapture.plist

com.apple.Image_Capture.plist

Then try again, if it works, trash those files.

So you can't use the "Other…" option in the Import to menu to pick another location?

Give this a try: boot into Safe Mode according to How to use safe mode on your Mac and test to see if the problem persists. Reboot normally and test again.

NOTE 1: Safe Mode boot can take up to 3 - 5 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

NOTE 2: if you have a wireless keyboard with rechargeable batteries connect it with its charging cable before booting into Safe Mode. This makes it act as a wired keyboard as will insure a successful boot into Safe Mode.

I'm a huge fan of PowerPhotos and know of no setting which would cause what you're experiencing.

Try this: create and log into a new, basic, admin user account, Set up users, guests, and groups on Mac,  and see if the problem persists. This tells us if the problem is limited to your user account or is system wide.

Note:  do not launch any 3rd party apps in the account so as to not install any of the supporting files that most create.

When you connect your iPhone to your Mac and open Image Capture set "No Application" to open when the iPhone is connected this way:

Then you can use this menu to select any folder on your drive to save the photo(s) to:

This way you can bypass the Photos Library entirely.

That tells us there may be some software in your user account that is the culprit.

Download and run Etrecheck. Be sure to give it Full Disk access before running.

Copy and paste the results into your reply. Etrecheck is a diagnostic tool that was developed by one of the most respected users here in the ASC and recommended by Apple Support  to provide a snapshot of the system and help identify the more obvious culprits that can adversely affect a Mac's performance.

Copy the report

and use the Additional Text button to paste the report in your reply.

Then we can evaluate the report to see if we can determine the cause of the problem.

I don't see any of the usual suspects but not having a Silicon Mac I've reached by help limit.

I did notice you have the Flip4Mac WMV Plugin installed and that's been unnecessary for quite a few years now. I'd uninstall it accordingly.

Also you have a lot of files in the Clean Up section of the report. Rerun Eterecheck and remove those files that are in the Clean Up section.