Ok, so I got myself Win11 set up. Installed Lazarus 2.2.4 with the official installer.
I forgot to test before I installed packages => so I did rebuild the IDE (only installed "Cody" which is not debug related).
But your code into a ButtonClick event (though using c:\ ).
Run, clicked enable Dwarf 3
Pressed the button -> dialog was shown, I selected a folder -> no freeze.
Set a breakpoint on the line of code, and used F8 to step over -> no freeze.
I can't reproduce.
However one important note.
FPC 3.2.2 has a bug in the optimizer. If you compile the IDE with -O2 or higher, then FpDebug will not work. Waiting for fpc 3.2.4 to fix that (or use Fpc 3.2.3)