Mayayana wrote:

It's broken. It never did work right because Microsoft
didn't code it properly and then never fixed the bug. A
fix and full explanation are he

http://www.jsware.net/jsware/xpfix.php5#folfix

(I also wrote a fix for Vista/7 at one point, which is
slightly different from XP. But in my limited experience
with Vista/7 it appears that MS finally fixed the bug.)

You'll notice the description for that utility says:

Windows stores settings for up to 5,000 folders and then ignores them!

Wrong. You can edit the registry settings for how large is the folder
customization cache. Increase the folder customization cache's size.
See my 1st-level post to Gilliver on how to change the cache size which
can be done with registry editing or tweakers.