I found a way to apply images to folders, I have large collection of music/ videos and I know all xp users love the way folder display images but Windows 7 has hard time applying this.
This step has to be applies manually on each folder but works for me.
1.Right click on a Folder >> properties (select)
2. Properties windows (displayed) >> Select Customise (last tab)
3. Choose File.. (under Folder pictures) >> select Image(.jpg) (Note: All my images are .jpg Format, don’t have be to be called “Folder.jpg”)
4. Change Icon (under Folder icons) >> Restore Defaults >> Apply >> Ok.
That’s it. It should work. http://img24.imageshack.us/img24/3756/foldereg1.jpg
Note: My folder is not customise to specific type, e.g. Music, pictures etc. I have left it as General Items.
(OS - Windows 7 Ultimate 32-bit (6.1, Build 7100) RC)