Hi,
Before moving on, could you please tell us where did the issue happened, in Windows Explorer or in Internet Explorer?
And please provide us with the exact error for convenience of troubleshooting.
If it is the first case. Please refer to the thread I have subscribed to.
New folder not working
http://social.technet.microsoft.com/Forums/en-US/73e96573-00a2-4f2f-a9f9-6d9f7fc4f277/new-folder-not-working?forum=w7itprogeneral
If the other situation, Try all the four methods that the MVP provided.
Unable to organize favorites in IE 7.
http://answers.microsoft.com/en-us/ie/forum/ie8-windows_other/unable-to-organize-favorites-in-ie-7/73e0e43e-cf75-47fa-8d46-406ed24e81a5
Also. We can restore the default location of your Favorites for test.
Unable to add or organize favorites in IE8. Receive error message that C:/Users/OPA/Documents/Favorites/Favorites refers to a location that is unavailable. The location does exist on my drive.
http://answers.microsoft.com/en-us/ie/forum/ie8-windows_other/unable-to-add-or-organize-favorites-in-ie8-receive/36c174f3-e49a-4142-b45b-dc20511af451
Meanwhile, please refer to the following kb.
"Access Denied" or other errors when accessing or working with files and folders in Windows
http://support.microsoft.com/kb/2623670#method22
Hope this helps,
Ada Liu
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