Go here for the fix.
"Folder" entry missing from the "New" menu in Windows Vista:
Windows Desktop Experience
"Shippo" <Shippo@xxxxxx> wrote in message
> I cannot add a new folder either from desktop or within folders - Click on
> 'New' but 'Folder' option missing from list. I have got around this by
> creating a empty folder which I copy and rename, but still would like
> Thanks in advance for help