Applescript Returned Text not Splitting - macos

Question

Ive been playing with applescript for about 2 weeks now, but I have hit a problem
Im trying to create an applescript that reads all the names of the folders on our server.
Then displays them in a drop down menu so that I can select the client.
The problem I have is that it is displaying the result as one selection option as a big sentence and is not separating each client, so they can be selected individually.
so far I have:
set theFolder to alias "server:"
tell application "Finder"
set theText to name of theFolder & return
set k to 0
repeat with thisSubfolder in (get folders of theFolder)
set k to k + 1
set theText to theText & name of thisSubfolder & return
end repeat
end tell
set l to {theText}
set l2 to ""
repeat with i in l
set l2 to l2 & quoted form of i & " "
end repeat
do shell script "/Applications/CocoaDialog.app/Contents/MacOS/CocoaDialog \\
standard-dropdown --title Title --text Text --items " & l2
set {button, answer} to paragraphs of result
if button is 1 then
return item {answer + 1} of l
end if
Many thanks
D

Answer 1

When you do this:
set l to {theText}
You're just creating a list of one item (your string), which means you end up with this:
{"theFolder
folder1
folder2
folder3
"}
You're then repeating in that "list," trying to add spaces between the items. But, you don't have a list really. You have a one item list, with return-delimited strings.
The best way to get a list of folder names would be to get them from System Events. Notice that in this case, you have to create a list with the name of the first folder as the only item. Otherwise, the & operation will join everything together as a string, instead of creating a list.
tell application "System Events"
set l to (name of theFolder as list) & name of folders of theFolder
end tell
There are also some syntactical issues that will hurt you later:
1 != "1"
CocoaDialog returns a string, with the button number: "1". You are using if button is 1. For equality, it should be if button is "1".
Parentheses are used for grouping, not brackets
If button is "1", you are returning item {answer + 1} of l. I blame Applescript for letting this work when it shouldn't. You're actually creating a list with a number, which then gets coerced by Applescript for the list index. Here are all the steps, assuming answer is 0:
item {answer + 1} of l gets turned into
item {1} of {folder1, folder2, folder3}
Applescript coerces to item 1 of {folder1, folder2, folder3}
Value returned: folder1
Here is a fully updated version of your script:
set theFolder to alias "server:"
tell application "System Events"
set l to {name of theFolder} & name of folders of theFolder
end tell
set args to ""
repeat with i from 1 to (count l)
set args to args & quoted form of item i of l
if i < (count l) then
set args to args & " "
end if
end repeat
do shell script "/Applications/CocoaDialog.app/Contents/MacOS/CocoaDialog \\
standard-dropdown --title Title --text Text --items " & args
set {button, answer} to paragraphs of result
if button is "1" then
return item (answer + 1) of l
end if

Answer 2

Change the line:
set l to {theText}
to:
set l to paragraphs of theText
and you should be good to go.