That is hard to say what might be causing this.
Are you trying to save the instrument using the 2save Instrument" button in the lower right corner of the "Edit" panel in the Track Info panel?
And did you pick a new name in the "Save Instrument" dialog?
Check, if the folder exists and is writable, where GarageBAnd is trying to save the file. GarageBand will write the file to your private Instrument Library in your User Library in the Home Folder.
Open the folder "Library" in your "Home" folder, then open "Application "Support" > "GarageBand" and check, if GarageBand could create an "Instrument Library" folder and "Track Settings".
If these folders are not there, check the permissions on the enclosing folders.
The answers to your first 2 questions were yes. The folders youi directed me to were there but once I got to the "Track Settings" level my permissions were set to read only. Once I switched all of them to read & write it saves everything just fine.
Thank you very much. This has been bugging me for quite some time.