I changed the folder so that the files can be accessible using the Media Manager.
See screenshot: dl.dropboxusercontent.com/u/4967834/joomla/Screen%20Shot%202017-02-22%20at%2010.07.16%20AM.jpg

But the file does not get uploaded to images/podcasts

And therefore the file does not play or download. Example test: www2.racmonitor.com/test

dl.dropboxusercontent.com/u/4967834/joomla/Screen%20Shot%202017-02-22%20at%2010.43.43%20AM.jpg

Via FTP I can see that the file ignores the Local Audio Folder setting and uploads it here: /media/k2/audio/2250.mp3

So from what I can tell the default "Local Audio Folder" of images/audio is not actually in the images folder but is actually the /media/k2/audio folder.
Is it supposed to be this way?

Maybe I should have just asked, how do I set the k2-item Media / Upload tab to save the files in the public_html/images/podcasts folder?