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Unable to create new folder in Windows 7

Unable to create new folder in Windows 7
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I am unable to create a new folder by any means in Windows 7. From within Windows Explorer if I select the "New Folder" option, nothing happens. Also, from the Desktop, the "Folder" option does not show when right-clicking and selecting "New".

I have done a system restore back beyond where I knew it was working and am still not able to create a new folder.

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