Fix broken spec and clarify dev setup instructions

[mfkp]

• updated instructions on setting up new dev environment
• tmp directory was missing, added change to auto-create the folder if missing
• 2 tests were broken because it wasn't deleting folders that contained test data

[baygeldin]

Thanks @mfkp! It's a good idea to create the folder when it doesn't exist. I've updated the PR a bit and will merge it soon.