@jack, I am running Firmware Version : 1.08 :Firmware Date : 12/18/2009.
@newbie06, I only use users for my FTP options when they access from outside my network. My internal network settings are set to ALL and does not require a password at all to access the device. But for testing sake, I did delete all the users, and tried again to delete the undeletable folder. Still no go. It seems that the folder's properties only have a checkmark under special properties area where all other normal folders have all checkmarks on all options for permissions. It's weird, because I CAN even rename the folder without issues, just can't delete it.