I use the latest OS X El Captain on MacBook Pro Retina, and I had this issue since Yosemite.
When I try to select a file to upload in browser (same problem in Safari and Chrome, but not in another applications like Photoshop) – it HIDES all the folders when I click on any colored tag on the side panel. Folders just disappear right after a half of second. So, I am able to select a tagged file but I can't go to tagged folder and select a file there.
I have tried to delete com.apple.finder.plist, I have also tried to create a new user, but the problem remains 🙁
Best Answer
Ok, looks like it's a browser issue with a upload field. When it has attribute accept="image/gif,image/jpeg,image/jpg,image/png,video/mp4,video/quicktime,video/x-m4v" - I can't select a folder.