Access denied even though I'm an Administrator?

The thing is though is that UAC can't "elevate" Explorer properly. See following article which explains why this happens and how to fix. I thought this was fixed in Windows 7 but appears as though it isn't, see Windows 7 Access Denied

From Technet:

To help prevent malicious software from silently installing and causing computer-wide infection, Microsoft developed the UAC feature. Unlike previous versions of Windows, when an administrator logs on to a computer running Windows Vista, the user’s full administrator access token is split into two access tokens: a full administrator access token and a standard user access token. During the logon process, authorization and access control components that identify an administrator are removed, resulting in a standard user access token. The standard user access token is then used to start the desktop, the Explorer.exe process. Because all applications inherit their access control data from the initial launch of the desktop, they all run as a standard user as well.

After an administrator logs on, the full administrator access token is not invoked until the user attempts to perform an administrative task.

So any time that you try to use admin credentials, you should be given a UAC prompt to invoke that Admin token, giving you access to make that change. Now if that is not working, you'll want to check your UAC settings.

Most likely, the setting you need to disable is the "User Account Control: Run all administrators in Admin Approval Mode". You can change that behavior by setting the "EnableLUA" key to 0 in the following location:

HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows\CurrentVersion\Policies\System

That should make admins run as admins all of the time. This is dangerous and I would recommend that you turn this feature back on for day to day use.

This is expected behaviour with UAC enabled.

How are you attempting to create the folder? Windows Explorer will generate a UAC prompt, so I'm assuming you're using some other method?

If you are doing it from a command prompt, make sure it is running with elevated privileges.

In Windows7, administrator account is hidden. You can enable the administrator account.

1. Click start
2. Program - Accessories- Right click on command prompt and select " Run as" administrator.
3. In command prompt type command type net user administrator /active:yes

It will cure it. you will 2 user account one is administrator and your user. Now you can login to windows as administrator. Now you will modify the files or even delete it.