Use the Folder trigger as described here: trigger:Folder [Keyboard Maestro Wiki] which will pass the name of the newly-added file in the KM token %TriggerValue% which you can process with the Split Path action.
You should note that %TriggerValue% only has a value when the macro is triggered, so if you're just trying the 2 actions you've shown us on their own it will not work.
Please post your full macro as per @hello's request.
Thanks to everybody for the replies.
I did try running the full macro when I was troubleshooting. The issue was that I had some space-characters in the file path which were not automatically escaped when entering the file path through the "Select Folder" button.
Split Path did not work with that. Luckily "Variable Filter" works like a charm.
I appreciate the thanks, but since you never shared your "full macro" it's hard to understand your comments.
When I use the Choose button in the Split Path action it always works regardless of the spaces in the path. Like this:
I would hate to think that another KM user might read your comments in the future and conclude that the Split Path action doesn't work properly when it plainly does. But of course you might well be referring to something else.
I think I understand it a bit better now. So $TriggerValue$ is only limited to the scope of one iteration of the macro and is cleared after that. Seems like that's the problem why I get the "Not Available in Editor".