I cannot create new folder nor can i upload images on tinymce. Even on your online demo, if you try to upload and insert images from tinymce on category, topic... it only shows error "object Object" . I've tested on firefox 17 and IE 9 already.
Ensure the user has the ACL permission "Admin area. HTML Editor. Manage pictures" enabled. This permission was added in 2.70 and is only granted to the 'Administrators' role (the upgrade script also only grants the permission to the 'Administrators' role).
You can change the setting at: Admin > Configuration > Access Control List