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From the Notepad++ forum:
https://notepad-plus-plus.org/community/topic/13120/notepad-v7-3-1
Settings/Preferences/Default Directory: Use new style save dialog
Reverts to checked when program restarted
This was OK in version 7.3.0
I'm having the same issue, so you might want to hold off from updating it.
[EDIT] Moved out of Outdated apps thread in order to preserve conversation - mod GC
This appears to be simply an annoyance, as opposed to a bug that should stop release.
To clarify - it is a bug, however not one that we should hold updating for.
Understood. Since 7.3.2 is probably coming out soon, I thought I'd save you some work. 
The "new style save dialog" controls the default file extension, so you have to manually set it for each new document. There was a similar problem in 6.8.6.
Why was this moved? It's a bug in an app version we haven't even packaged.
As the OP is not an outdated app notification, but rather a bug report. Admittedly, it is a bug report against a version not yet released, and not a portable-introduced bug at that.
As such I consciously did not apply a bug tag, but kept the thread available for further comment, as well as available for linking to the outdated thread, as we have been known to do on occasion.
Just FYI. This bug will be fixed in the next release.
https://github.com/notepad-plus-plus/notepad-plus-plus/issues/2814
Just to close out this thread, the bug has been fixed in 7.3.2
Notepad++ v7.3.2 new features and bug-fixes:
Fix crash issue on column mode editor.
Fix "Use new style save dialog" setting's regression.
Enhance "Open file" command - open a file from editor zone without selecting its full path.
Fix word char list settings not applying on next launch issue.
Fix block uncomment for line comment bug.
BaanC Language is supported.
Add error notification on run dialog.
Fix the caret position not maintained issue between document move.
Fix caret goes to wrong position after word completion.
Enhance Function List for supporting language.
Add check mark in Language menu.
Fix toolbar not showing issue while launching Notepad++ from system tray in some unknown configuration.
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