Automatically fill the default vocabulary term associated with a content type when editing a node
I think the answer will be to make your button/menu item dynamic using arguments from the URL. It sounds like when a user clicks the "Add Classified" they are already viewing the classifieds tagged with a particular location taxonomy term. In which case, I'd imagine that term name (or id) appears in the current url, something like http://yoursite.com/classifieds/LosAngeles. If so, I believe you can pull that term out of the url and use it in your link, something like http://yoursite.com/node/add/classified/LosAngeles. Then, you'd need to alter your 'Add Content' form to pull in the term from the url (the LosAngeles part). This should work in theory, however I'm not sure exactly how to do that in practice. I'll see if I can figure it out before you end up answering your own question, but that should at least help point you in the right direction for now.