Thank you LucaMs and sorex for your help. As usual, the solution was easy. I hinted that I did not think I was actually creating the directory and I was not. The correct syntax for creating a directory is
File.MakeDir(File.DirInternal, "BlankSudoku")
Then to read from or write to the directory, the correct syntax is
File.WriteList(File.DirInternal & "/BlankSudoku", Fiall & ".txt", List1)
not
File.WriteList(File.DirInternal , "/BlankSudoku", Fiall & ".txt", List1)
The important thing for beginers to note is when creating the directory, do not use a back slash, then to access the directory the back slash is required. Just goes to show.