You're over thinking it, and you're going to kick yourself when you realize how easy it is.
There are actually at least two ways to do this.
1: From the main bookmarks menu, right click on the folder you want to rename, select properties, type in the new name, select save changes, and you're done
2: From the organize bookmarks window, click on the folder you want to rename, on the lower right will be a textbox with the name that you can edit, then just click somewhere outside of that box to save the changes
A third option might be to download a program that can manipulate SQLite databases, since that's how Firefox now stores bookmarks. However, that seems a little overkill, and has the potential to ruin some of the "behind the scenes magic" that makes up some of the unsung hero features of Firefox 3. Like being able to search your bookmarks from the address bar by simply starting to type the name of the bookmark you're looking for, and being able to add categories to your bookmarks so you don't really even need folders anymore.
This isn't necessarily an XP related question since Firefox is used in other OSs, but... .
I have Windows XP Pro, SP3 and use Firefox 3.0.4.
How do you rename a Bookmark folder in Firefox 3? In 2, in "Organize Bookmarks...", I could just highlight the folder and push the "Rename" button that was on the toolbar. But in 3, there is no longer a "Rename" button. Can somebody please tell me how to rename a Bookmark folder now, in Firefox 3?