Found the cause of the issue, you must have the name of a directory that exists in the DesktopModule directory in the folder name.  The test module I create was Text\HTML2 with all the same setting except the Module name, Folder and Friendly name all said HTML2.  When I changed the folder name to HTML, which did exists and update the definition, the "Create Module Package" appeared.  When I changed it back to HTML2 and clicked update the "Create Module Package" disappeared again. This makes sense since how can it create a package if it is not pointing to a valid directory.  If you want you can enter this into the Public core issue database as an enahancement, because there has to be a better way to handle this.  Maybe when the user clicks update we can verify that the direcotry the entered does exist.

Kaliopi, don't forget to mark this as post as being answered.