I've seen this bug before in previous versions of Windows, but it seemed to come and go and was never a persistent fault. However, on my Windows 7 installation it has been bugging me for months and I finally had enough and decided to work out what's wrong and how to fix it.

For anyone who doesn't know what this is, here are the symptoms:

1. Right click in a directory and choose New -> Folder
2. The new folder doesn't appear
3. Press F5
4. You now see the new folder and it is ready for you to type in a new name
5. You type the name, press enter to save it, but it still says New Folder as the name
6. If you press Enter on it (or double click it) you get a message saying that the folder could not be found
7. If you go back and press F5 you will see the folder renamed as you specified

So I've looked around and read all sorts of solutions. One was to clear my profile's IconCache.db, another was to change the value of DontRefresh in the registry (this doesn't exist in mine) and another is as simple as ending the Explorer.exe process in Task Manager, and then restarting the process from within Task Manager again. None of these worked.

More investigation and I found someone on the Microsoft Answers Forums reporting that the folder does eventually appear, but it takes around 30 seconds. A couple of people thought it was related to a network connection issue. Ah! I have VirtualBox installed on my PC, and that installs a network adapter called "VirtualBox Host-Only Network". I disabled this and magically, the problem was gone. I've re-enabled it and the problem is still gone. So, I fired up VirtualBox and launched a Ubuntu VM and so far so good. It's still working fine. The network connection in the VM is also working fine.

Mystery solved? I don't think so. I expect it will come back at some point, but for now it's working as it should and I'm happy. If you encounter this problem try disabling any network adapters that aren't connected at the moment, re-enable them, and see how it goes.

Good luck!