The "New" list in the right-click menu draws from
Running the command
tail ~/.config/user-dirs.dirs showed that XDG_TEMPLATES_DIR was set as
$HOME and hence was trying to use all the various dotfiles in the home directory as templates.
Amending the file so it says
XDG_TEMPLATES_DIR="$HOME/Templates" followed by a restart fixed the issue.
Just adding a comment here, as this has been an issue that I encountered recently.
If the Templates folder is Deleted, and the system is restarted, the config line changes to XDG_TEMPLATES_DIR="$HOME".
By setting it to "$HOME/Templates", then creating a folder called Templates in the Home Directory, then restarting, fixed my issue.