I found some answers to creating new notes with specifying the folder, with plugins, but those don’t seem to do what I’m after.
My use case is; I write in A folder, in a note called X. In X, I write, and decide I’ll make one of my few words a new link (as in highlight->right click->Add link). This creates a new note with the highlighted text title (unless I specify otherwise). Great so far!
The challenge is, all these new notes end up in my big inbox of new folders (whatever I set that to be). It’s time consuming for me to clear and organize these new notes later and place them in the project folder (A folder I mentioned). I’d like this new note I create with ‘add link’ to appear in my A folder, not the inbox.
When I highlight a text and use the context menu as per you description, Obsidian turns it into a link, but it does not create the note unless I click on same link. Once I do the latter my workflow (the one you referenced) kicks in.
Don’t know if you also found the post where I provided instructions for the implementation of my solution?
P.S.: Just wondering - in case all you want is for the new note to be created in the same folder as your current note, I’d suspect this should be achievable by amending the settings in Obsidian accordingly(?):