New pages that are created in a subfolder of a Pages library of SharePoint Server 2007 are saved in the root of the Pages library

You create a new site collection that is based on a publishing template in Microsoft Office SharePoint Server 2007. Then, you create a new subfolder in the Pages library. In this situation, when you try to create a new page in the subfolder, the page is created in the root of the Pages library instead of in the subfolder.

This behavior occurs because SharePoint Server 2007 does not support subfolders in the Pages library. Although the Pages library can be configured to let you create subfolders, many of the Pages library features will not recognize any subfolders that you create. For example, the form that is used to create new content in the Pages library will automatically save new content in the root of the Pages library. This behavior occurs regardless of the folder in which you click the New command.

This behavior is by design.