Maybe the problem is in the code that uses the FilenameFilter
class.  It uses recursion.  The failure does not come on the first
invocation but on the first recursive call.  The calling method is
shown below.

    Does recursion and me creating a file object in a recursive
method possibly cause the problem?

                         Thanks, Alan

public static List<File> listAllFiles(File dir, String extension)
throws Exception
  {
     if (dir.exists())
     { System.out.println(".....directory " + dir.getName()
                    + " exists."); }
     else
     { System.out.println(".....directory " + dir.getName()
                    + " does NOT exist!!!"); }

     try
     {
        if (!dir.isDirectory())
        {
           System.out.println("******* Not a directory, returning
null *********");
           return null;         // Not a directory
        }
        else  // input file reference is a directory
        {
           // Initialize lists of files and directories
           List<File> FileAndDirList = new ArrayList<File> ();
           List<File> filelist = new ArrayList<File> ();

           // Get list of files in the input directory
           FilenameFilter select = new FileListFilter(null,
extension, true);
           File[] filearray = dir.listFiles(select);
           System.out.println("Length of array = "
                                + filearray.length);

           // If file array is not empty, convert it to a list
           if (filearray.length > 0)
           {
              FileAndDirList = Arrays.asList(filearray);

              System.out.println("\nFiles in directory:");
              for (Iterator<File> pit = FileAndDirList.iterator();
                                pit.hasNext();)
              {
                 File afile = pit.next();
                 System.out.println(afile.getName());
              }     System.out.println("\n");
           }

           // If there are files and/or directories, check
           // to see if they are directories or other files
           if (!FileAndDirList.isEmpty())
           {
              boolean addedOK;
              for (Iterator<File> it = FileAndDirList.iterator();
                                            it.hasNext();)
              {
                 File file = new File(it.next().getName());

                 if (!file.isDirectory())
                 {
                    addedOK = filelist.add(file);
                 }
                 else
                 {
                    System.out.println("Directory: "
                                   + file.getName());
                    List<File> temp = new ArrayList<File> ();

                    temp = listAllFiles(file, extension);

                    if (temp != null)
                    {
                       addedOK = filelist.addAll(temp);
                    }
                 }
              }
           }
           return filelist;
        }
     }
     catch ( SecurityException  e )
     {
        e.printStackTrace();
        return null;
     }
     catch ( RuntimeException  e )
     {
        e.printStackTrace();
        return null;
     }
  }
}

You can download the code from Sun, but it won't be much because it's an
interface.  Better would be to read the Javadocs for it:
<http://java.sun.com/javase/6/docs/api/java/io/FilenameFilter.html>

By whether File.isDirectory() returns true.
<http://java.sun.com/javase/6/docs/api/java/io/File.html#isDirectory()>
or contrariwise, whether isFile() does not.
<http://java.sun.com/javase/6/docs/api/java/io/File.html#isFile()>

Needless to say the File methods are pass-throughs for information from the
underlying OS.

To the OP:  You are truly going to regret all those println() calls in a
FilenameFilter.accept() method.  They obscure the logic, both at compile time
and run time, and will slow things down horribly.  What you want is the
'assert' keyword.

A FilenameFilter is supposed to be rather lean, implementable as an anonymous
class.  Sometimes it pays to write one into fullness, as you did, for the more
complex implementations, which perhaps this is.  Even so, keep the sensibility
of a lean implementation when writing one in its own named class.

Given the kinds of tests you're performing, you might consider implementing a
FileFilter instead, in conjunction with the File.listFiles( FileFilter ) method.