Interesting - Hiding the folder? Are you talking about hiding the top level folder but not allowing it to hide sub folders?
I tried this and it didn't work, but I did notice that the folder shows "read only". When I clicked off the read only, it looked like it took and then when I checked properties again, it showed read only again. So, not sure if this is the problem but I'll see if I can figure that out. Thanks for the info and if anyone else has any other ideas, I would love to hear them.