favorites missing on macbook air sierra, screen saver option all other folders are present

I'm not quite sure, where you have been looking in the System Preferences > Desktop and Screensaver. You access the Favorites album in Photos this way:

• Set the source in the Screensaver preferences to "Photo Library" (at the bottom of the source list, not one of the folders above).
• When your Photo Libraries are shown, select "Photos" and wait. This can take a long time, until your Photos Library will be shown.
• Now select the Favorites album.

, it has suddenly appeared two days later and is working.

Did you perhaps restart your Mac or quit Photos?

The Media Browser will always be lagging a bit behind. Photos needs to finish writing the recent changes to the Photos library, and then the Media Browser has to read the changed library.

Perhaps the Media Browser has still been seeing a cached previous version, where no favorites had been tagged. Or the current Photos library had not yet been enabled as the System Photo Library.