Vista SP2 x64 bug - File System Error - User folder new zip

I have an issue I can't find any help on. I did a fresh install of Vista Business SP2 x64 and when I go to Start->User folder then do a File->New->Compressed zip, I get a File System Error. If I right click and try to create it, same thing. If I navigate to C:\users\User folder and right click or file-new, it makes the zip just fine. I can also make the zip file inside any folder in the User folder as well.

I have noticed that if you open windows explorer, the c:\users\user folder and the User folder that you see on the desktop/start menu is logically separated (the green folder). My problem is making the zip in the logical (green) folder.

A friend on Vista Premium x64 has the same issue after after he downloaded SP2 from Windows Update, so it's not my media.

• sfc /scannow finds nothing.
• ownership of folder belongs to me
• everything else can be created as it should

I'm not looking for a replacement for creating zip-files, ie., "Just use winrar". I'm looking for the fix to this problem.

Thanks!