dirwatch uses the dir_watch.dll component included in the SysAnalyzer project to watch for file creation and modification events.
It can watch all activity on a drive, or focus on a specific folder. Folders are added by dragging and dropping the folder onto the left-hand listview and ticking the checkbox.
Modified files can also be automatically copied to the user's analysis directory when they're touched. The destination is hardcoded to [Desktop]\Analysis\.
This application shares much of its codebase with the SysAnalyzer project, so its source ships there: SysAnalyzer source on GitHub.