File>NEW menu does not work with certain permissions - Bug?

A user account has the following permissions in a folder off the root that
does not inherit permissions:

Read & execute
List folder contents
Read
and special permissions of
Create files/Write data
Create folders/Append data

User can create files in this folder because I can open a Notepad doc and
save the file her..

But when I right-click and select NEW, only a "Folder" option is shown.. it
does not list all the other new things I should be able to create like "Text
document", link, word document, etc..

The NEW menu works fine if user has full rights in folder..

This looks to me like some type of bug.

dave