As the code is running outside of DSS (in a pod), so you don't have access to the DSS filesystem. You will need to use get_download_stream/upload_stream to read/write from/to the managed folder.
Not sure why you need to create the folder and save files directly in the filesystem, but your code will save the files in the pod's filesystem when running in Kubernetes. Assuming this is wanted behaviour, your code can look something like follows:
# Read recipe inputs
Clinical_data = dataiku.Folder("TEST_WITH_FANG.LeD8SADS")
paths = Clinical_data.list_paths_in_partition()
folder = 'test_data'
folder_path = os.path.join(os.getcwd(),folder)
for path in paths:
with input_folder.get_download_stream(path) as f:
new_fiile_path = folder_path + path
with open(new_fiile_path, 'wb') as local_fp: