Unable to Add a Web Folder to the My Network Places Folder

You attempt to add a Web folder to the My Network Places folder, but you are unsuccessful and you receive the following error message:

This behavior may occur if you have a system policy that redirects the user's Application Data folder and prevents the creation of the Msdaipp folder that the Web Folders feature uses. The Msdaipp folder is normally located under the user's Userprofile\Application Data\Microsoft folder.

When you do not use this system policy, the first time you create a Web folder in the My Network Places folder with the Add Network Place Wizard, a subdirectory is created. If you set a system policy to change the Userprofile\Application Data folder to a universal naming convention (UNC) on a network server, this wizard does not create the Msdaipp folder at the redirected location and you receive the preceding error message.

Microsoft has confirmed that this is a problem in the Microsoft products that are listed at the beginning of this article.