I recently started having this issue, and aparrently I’m not alone as others are also complaining of this issue. Some have reported it to be update KB980408, but that uninstalling it won’t fix the issue? I cannot confirm or deny this, as there’s a registry patch/fix instead.
For reference, this is the error in question (when trying to rename a folder).
And here are some hotfix registry patches to apply to fix the issue. I’m sure Microsoft will get enough complaints about this to fix the issue, but in the meantime this should do the trick. As always, use this at your own risk, and don’t touch it if you’re unaware of what the registry is.
FolderFix – Includes both x64 and x86 versions, and should work on Windows 7 and Windows Vista.