Took me a while to track this down, but I'm 99.44% sure this is the issue

First part, the left-hand pane isn't a

show-me-everything pane, it limits the number of returns to somewhere around 100

records, I know this because I have a project with 545 items at the item set level, and I can see that there obviously aren't 545 items

under the item set.  Second part, I made a request a while back to not include the folders in the grid listing for the item sets (that

is, not list the folders right alongside the actual items from the item sets), and it looks like you implemented that globally, even though there is still a button to sort based on folder/item status (hmmm).

Anywho, all of this taken together, when a new folder is created it gets the latest sortOrder key in order to show it at the end of the list.  However, since the left-hand pane only shows the first 100, or so, items and the folders aren't shown in the grid listing for the item sets, so they're now unreachable without direct database updates to get their sortOrder values low enough to display in the left-hand pane.

I would propose that when folders are created that they are set to sortOrder of '1' so that they appear at the top of the left-hand pane, since it is possible to have enough folders to re-encounter this issue.

Hope that's enough info to repro