Please see this post. I think you are missing the observer.startWatching()
call after you setup your observer.
observer = new FileObserver(pathToWatch) { // set up a file observer to watch this directory on sd card
@Override
public void onEvent(int event, String file) {
//if(event == FileObserver.CREATE && !file.equals(".probe")){ // check if its a "create" and not equal to .probe because thats created every time camera is launched
Log.d(TAG, "File created [" + pathToWatch + file + "]");
Toast.makeText(getBaseContext(), file + " was saved!", Toast.LENGTH_LONG).show();
//}
}
};
observer.startWatching(); //START OBSERVING