This might not be supported. User folders aren't 'real', they are just links. New feature services are created by File GDB upload and publishing. You can certainly go to your content and reassign the item to a folder.
What build are you using? I have done a lot of testing with a Safe support case in May 2016 to get this bug fixed until it worked. Most of the quirks were fixed after several testing iterations but I have not tested the feature again on FME 2016.1.1.0 (Build 16580). If you need more details on my email exchange with Safe support and some of the quirks, please PM me so I can forward the email exchanges to you - some of the fixed issues involve the workflow of how feature layer is created behind the scene in portal/AGOL, error logging and name conflict. @jimo, if you can test the feature in this build and it works for you, please reply to this blog as well. Thanks!
I am using FE 2016.1.0.1 build 16494. I will upgrade to >= 16580 and report back. Thanks @geospatiallover.
I am using FE 2016.1.0.1 build 16494. I will upgrade to >= 16580 and report back. Thanks @geospatiallover.
Actually the latest build offered on the FME download site at https://www.safe.com/support/support-resources/fme-downloads/ is 16494. I will contact Safe and ask for this build.
I upgraded to build 16608 and am able to create a new feature service in ArcGIS Online using the Esri ArcGIS Online (AGOL) Feature Service writer. Good work, FME developers!