Trying to upload a file, in the File Picker provide attachment info and name to save as. Then click 'Upload this file'
We get the Loading message with the spinning wheel, then a popup appears:

File Download
Do you want to open or save this file?
Name: respository_ajax.php
... Open Save Cancel ...
etc.

I can cancel and go to Recent Files, click the new file, choose Select this File, at which time I get the option to Save Changes, which does commit the upload.

So not sure if this is a Moodle bug or a setting here, but our moodle 1.9 works fine.
Thank you