Finder “Save” Window Lag After macOS 26.1 Update (iCloud Sync Issue)

The Dev Forums thread says that this should be resolved in 26.2, but try this:

In Finder, press Command-Shift-G and paste 

~/Library/Preferences/com.apple.appkit.xpc.openAndSavePanelService.plist

in the "Go to Folder" line. Delete this .plist and restart.

There is a known bug causing a lag in the open/save dialog, resulting from having folders/files at the root level of your iCloud Drive (see this thread on the Dev Forums).

This literally saved me!!! I had the beachball, the sluggishness opening files and maneuvering between them, beachball attaching files, hugh!!! It was driving me batty/crazy!!!!. This update is simply awful! I've unticked my automatic updates. I'm too scared now...So here's how I fixed it, after days of trying to find a solution before it dawned on me it was this update and after spending money on IT:

I reduced the transparency and motion, unticked Desktop & Documents in iCloud Drive, and most importantly did this: "In Finder, press Command-Shift-G and paste 

~/Library/Preferences/com.apple.appkit.xpc.openAndSavePanelService.plist

in the "Go to Folder" line. Delete this .plist and restart."

That did it. I'm SO relieved. But will feel better once Apple fixes this in the second update.

It resolved the issue for me too. Thank you Mac 2013!