@jariesuicune,
Yea, that's where the folder is. I tried moving the 3DSSaveBank folder and like you said if you save it just creates a new folder. I also checked permissions and it has full privileges to read and write. I'm pretty much stumped at this point. The errors I'm getting are .NET errors though, and that root element issue could possibly be an issue with some XML file, but I have no idea where to look. It's really frustrating since it was working fine and then one day just stopped.
I don't know if this is notable or not because I don't know if it was possible before. If I plug my cartridge into the dongle and then insert the USB I can detect the "main" save file on the cartridge and open and edit it in PKHeX, but I can't export any of the changes without the Cyber gadget software. I'm trying everything I can think of to test regardless of how small it might seem.
Also, to tag on to what Natsune said about Japan, I went there for a trip about 5 years ago and had the best vacation I've ever had. I highly recommend going if you can!