Create an automator script to create folder + move files into created folder

Try using a feature of OS X called "Folder Actions".

Right click on any folder and select "Folder Actions Setup".

It will gives you a whole list of options. These options come with the operating system. If you would like to modify a script you can double click it and make a duplicate. You can edit your script to do what ever you want. For example, I could code the script so that once an item has been added to the folder, it would play a sound or send me an email. It's quite useful.

Once you have coded your script you need to move it to the correct path. Go to Finder and select "Go", then press "Go to Folder". Type in this path: /Library/Scripts/Folder Action Scripts/. Drag and drop your script to that folder. You may be prompted for a password.

Next, go to the folder that you want the script to be applied to. Right click and your new script should be listed. Select it and hit Attach.

There you go!

Hope this helps.

More Information on Folder Actions here

If you're creating a Service using RunShell Script which you want to pass the selected Folder(s) to the RunShell Script and have additional actions take place in the script on them, then start with these settings.

Create the Service:

1. Open Automator and select Service or File > New > Service If Automator is already open.

2. Set Service receives selected to folders and in to Finder.

3. Add a Run Shell Script Action, setting Shell: to /bin/bash and Pass input: to
   as arguments. This changes the default code to from cat to:
   

   for f in "$@"
   do
       echo "$f"
   done
   

Now you can use $f to act on the target Folder(s), e.g. cd $f and now you're in the directory of $f and can add additional code to act upon the files/folders within $f, etc.

Update:

Use the following working code as an example:

for d in "$@"; do
    cd "$d"
    for f in *.log; do    
        rm "$f"
    done
done

Within the Test and Test copy folders there were a number of .log files and files with other extensions as well. When the above code was run it deleted only the *.log files within the target folders as show in the images below using two folders or one folder and both files and folders with/without spaces in their names.