Same IO Error problem here with WordPress 3.0, Flash 10.1.53.64, Firefox 3.6.6 on OSX 10.6.
Some combinations of WP 2.9.x/3.0beta/RC and CFT 1.6.x did autoload some templates (usually the first one in the template list, if it applied to the post type), but not all of them.
Currently developing with WP3.0RC1 and CFT 1.6.8 and it’s still not autoloading much. It’s not a big deal developing, but giving a site to an end-user and telling them all the WP admin things to remember will get a little tricky 🙂
I’ve got a similar problem with WordPress 3.0RC1, CFT v1.6.5.
Using custom post types, etc. only the first template in the list autoloads for the first registered post type. The other post types and templates don’t autoload and have to be initialised manually.
cheers,
// greg