I think this is a bug introduced with the recent update - it was working correctly.
However I found that the following works and is probably more efficient
on run argv
set bundleID to (system attribute "alfred_workflow_bundleid")
tell application "Finder"
set currentFolder to (POSIX path of (folder of the front window as alias))
end tell
tell application id "com.runningwithcrayons.Alfred"
set configuration "path" to value currentFolder in workflow bundleID
end tell
end run