Hi Adrian,
If I understand correctly, you are experiencing two issues:

1) if you try to georeference the provided JPG file with a JGW sidecar file, then the the georefence file is not created the error "Transform Failed: Could not create destination file" is displayed

I can confirm the issue occurs on Windows running either QGIS 4.0.3 or QGIS LTR 3.44.11.

I suggest you to report the issue to https://github.com/qgis/QGIS/issues providing all the requested info, the layer's file and detailed step-by-step instruction in order to reproduce the issue

2) if you try to georeference the provided JPG file without the JGW sidecar file, then the georeference file is created but it is in your opinion not correctly georeferenced

It is not clear to me how to reproduce the issue. I've tried to georeference the provided JPG file with various random GCPs and georeferencing methods, and it seems to me the JPG file is correctly georeferenced depending on the GCPs and georeferencing method used.

Please provide the GCPs file and all the georeferencing parameters and settings used in your case and a reproducible way to verify why the resulting georeferenced is not correctly georeferenced in your opinion.

Best regards.

Andrea
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