If you have an image in which the parameter 
#SMLoaderDownloadDirectoryName is not present in Preferences' 
Parameters, you get an error loading any package.  I got an image 
with it absent by updating from an old image to 3.6beta (this may 
have been my first mistake).

It certainly appears that

SMLoader class
downloadDirectory
	"Answer my default download directory. "
	^FileDirectory default directoryNamed: self downloadDirectoryName

is expecting (self downloadDirectoryName) to be a local folder name.

But in the case when #SMLoaderDownloadDirectoryName is absent, it 
will not be a local folder.  See the last line of this method.  I 
would suggest the empty string instead.

SMLoader class
downloadDirectoryName
	"Answer the name of my default download directory.
	This can be a relative name.
	Default to the current directory for compatibility with old behavior"
	^Preferences parameterAt: #SMLoaderDownloadDirectoryName
		ifAbsentPut: [ FileDirectory default fullName ].

Also, have we thought about the case when it remembers the name of 
the download folder, but the image has moved to a new machine, and 
the folder is not there?

--Ted.

-- 
Ted Kaehler         http://www.squeakland.org/~ted/
(home) 3261 Montecito Drive, Las Vegas, NV 89120.  voice (702) 456-7930
In 1747 Ben Franklin proposed that electricity is a single fluid 
instead of two, and called the source of current "positive".  In 1897 
J.J. Thomson showed that
it is really the "negative" electrons that move.  Luckily, all the 
equations are the same either way.