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I have seen this posted many times - but have not found an answer that fixes the problem. It seems like it has been ongoing for a long time.
I cannot save to my local drive from Illustrator - only to the cloud. I can open projects, work on projects, but ONLY save to the cloud.
Mac Studio - Monterey 12.3
For some people it helped enlarging the dialog box. Can you do that?
Also: Does Illustrator have full disk access?
You're using 27.0.1 and have in Prefs, under File Handling, the Default file location menu choice set to "On your computer"?
We are sorry for the trouble and delayed response. This issue has been resolved in the later version of Monterey & Illustrator.
Would you mind updating to v12.6.2 of macOS & v27.1.1 of Illustrator?
If the issue persists, you can try the following steps:
Kindly update the discussion if you still need assistance with it. We'd be happy to help.