I am not having some luck with my briefcases on my machine.
At this point, I believe it has something to do with the new file structure in Windows 7 the libraries specifically. I came to that conclusion by trying to use Windows Sync Toy as a backup feature. I set it up the same way I have my briefcases navigating to my library to select folder pairs. Ran it, no problem. Ran it again and for some reason the Sync Toy took a huge chunk of my folders and files from my Word Docs folder and put them in my System Items folder. I haven't a clue. After I saw that fiasco happen, I then updated one of my briefcases and those files were not updated, not even listed as needing to be updated. That is how I came to the library problem. I then created a new briefcase on my external HD and this time I navigated through My Computer down to My Documents and chose the folders there for my New Briefcase (instead of picking them from the Libraries listing). This Briefcase seems to be working better. Every now and then I get the error message that my Vista laptop got me used to something along the lines of "unknown error...some of your files were not updated..." and I run the update again and those files were updated the first time and there are no changes needing to be made. Later today, I am going to create a new file in each folder in My Docs and see how the briefcases handle those adds. Kate, I have seen the orphan folder error when I try to update a folder itself, but if I update the entire briefcase, that "orphan folder" is not an orphan anymore.
Wow, long post, but I hope this helps someone.