File Connector Not picking file in Azure Logic App

Question

I have created an Azure Logic app, following this blog post.

http://blogs.biztalk360.com/azure-api-app-and-logic-app-in-depth-look-into-hybrid-connector-marriage-between-cloud-and-on-premise/

The difference is that both the source and destination are on the same server, so I have made only one instance of File Connector and using it in the app.

When the app is running I have observerd the following:

1. Trigger makes one entry of success in "Trigger History" section and all the other entries are of Failed.

2. File is not deleted from the source Folder.

3. File is not moved to destination.

Please let me know how I can troubleshoot this issue.

On further investigation, I have found I am getting this same error as in this blog post https://social.msdn.microsoft.com/Forums/en-US/d06a12e6-86ce-4f1d-b94e-ea6a9c2c260d/why-file-connector-returns-internalservererror