When you invoke the policytool under a directory other than your home directory,
in the file->open window, the default folder shows your home directory while
files content shows the files under your "current" (not home) directory.
BTW, the arrow beside the folder field doesn't seem too useful.
looks like an AWT bug in java.awt.FileDialog.
note -- this is not reproducible on every machine.
on my machine (angeles) and jan's machine (laguna),
the bug does not show up. however, on valerie's machine (dali),
the problem exists.
i have written a test program which reproduces the bug
(therefore you don't have to go thru the policytool code).
it is attached as FileDialogTest.java.
directions to run the test are in that file.