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Hi everyone,
After a hair-raising journey around the internet searching up hill and down dale for an answer to this question, I thought I would post the answer I eventually found in the hope that it will help others.
Problem: When trying to add images when editing pages in the (otherwise FANTASTIC!) Content module, you see an empty, nameless directory which will not let you upload any images or add a new folder.
Question: Where is fckeditor looking, and where is it trying to put the images??
Answer: In your XOOPS site root, create a folder called UserFiles. Beneath that, create a folder called Image. CHMOD the Image folder to 777 and all should be well.
I found lots of answers on the internet which involved mucking about in a pile of incomprehensible code which left me far more confused than when I began so hopefully this is a plain english solution that will be of some use to other non-coders like me.