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If you haven't already, try restarting BC and see if the problem still shows up. I can't see how it would get into that state if it hasn't already thought there was a file there. If it's still a problem after restarting it may be an issue with the folder's attributes.
No, I was suggesting that something about the folder's attributes was making BC think that it was a file. Obviously Windows would no better, but it would explain what you're seeing. I really can't imagine what the state would have to be to trigger that though.
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