In tip 382, I scripted a workaround. Here is a registry hack:
Use Regedt32 to browse to HKEY_CLASSES_ROOT\Directory\Background\shellex\ContextMenuHandlers\New
If the path is not there, Add Keys. Select the New sub-key and Add Value, a type REG_SZ entry, without any name. Set the string value to \{D969A300-E7FF-11d0-A93B-00A0C90F2719\}. In the right hand pane, this will appears as:
<No Name> : REG_SZ : \{D969A300-E7FF-11d0-A93B-00A0C90F2719\}
You may add this entry, even if you don't have the Desktop Update installed. It can't hurt and may help your problem.
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