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 When I press Alt-Enter on a desktop folder, why don't I get the Options dialog to set a custom icon?

If you press Alt-Enter when an item on the desktop or in an Explorer window is selected, the standard Windows Property sheet is displayed. If you press Alt-Enter when hovered over an item in a Power Drawers menu, you get the Options Dialog for that item. The difference is caused by the Windows shell. The Options Dialog for folders allows you to set a custom icon view and other settings for that folder as well as getting an overview of that folder and the drive it is on.