New Folder button and shortcut does not work in Windows 7

I recently upgraded from Vista 32 bit to Windows 7 Home Premium 32 bit, now when I open a folder there is a button on the top of Windows Explorer called New Folder, which you click to create a new folder.

However, whenever I click on it, nothing happens. Also, windows 7 has a keyboard shortcut to create a new folder (Ctrl+Alt+n), but even that shortcut does not create a folder. The only way I can create a new folder is by right clicking, selecting New, and selecting Folder.

I am trying to figure out why the New Folder button and keyboard shortcut are not working. If anyone has any ideas, it would be greatly appreciated.

There is a problem with focus. If you want create new folder via button or shortcut, your focus must be in folder/file list.