In order to help us to find out what happened with your update after it fails, please go Help > Support > Send developer details (it should generate a log)
But in order to solve it, please uninstall this version and update your desktop version (if you like) directly from our website: https://www.designer.io/en/download/
I’ve spoken to one of the devs about the sync. They told me the cloud reference doesn’t include your local path (files on your machine), so it doesn’t matter where you save the file, it will keep the cloud reference. So, yes, you can move your file wherever you want.
I’ve to add that your local file (for security reasons) will never be touched and when you open a local file, whose cloud version is different, you will see a pop up like this: https://share.getcloudapp.com/04uPPzdD so you may choose what to do.
The reason I’ve edited my answer is that I was consulting them and choosing where you want to save your files is one of the things to come, in future versions, but not now. I also quoted this part from the changelog:
We are already working hard to bring the other features you are used to from the regular desktop app to the PWA too, like system fonts and saving right to your local file system (currently, you just have the File → Download option, like in the web app). Stay tuned!
We appreciate your feedback.