Can't create playlist folders on ipod classic 120gb

Question

Hi Everyone!
I have an ipod 120gb classic since Jan. and have synced music on it and have it organized with folders and then playlists in them. Now I am trying to add more music and can't create new folders. I highlight my ipod, click on File>New Playlist Folder and it creates one in the itunes playlist area instead. I can click on File>New Playlist and it will create one on the ipod (not in the itunes area like the folder one does.) I can drag playlists from itunes and drop them on the ipod. But when I try to drag an itunes playlist folder with playlists in it, just a playlist is created with the folder's name. On the ipod it will not have the songs in playlists, just in abc order. I honestly don't remember how I did create the folders I do have, but I don't know of any other way than what I'm doing now.
I called Apple support and the guy spent over 30 minutes with me (after I searched high and low through the discussion forum.) He tried on his end and was getting the same results. I even tried reinstalling itunes and did a reinstall of an earlier version of itunes and all that entailed with negative results.
If there's anyone out there than can help me I would greatly appreciate it because I do not like to have my music in lists but organized in folders on my ipod such as Pop, Country, Romantic, etc. I know this ipod can organize into folders since I did it earlier
Thanks!!

Answer 1

Hi Everyone!
First thanks to you Jeff for your help also. I have now resynced (is that a word? LOL) my ipod with folders that way I want. From the replies I got I was able to figure out what I was doing wrong which wasn't the way itunes worked and the way I thought it should Part of my problem was that I had too big of a time span between syncings of my ipod, I had changed my itunes playlist, and I must have used my desktop computer to first load some of the songs rather than my laptop. So when the message came up when I had to change my settings I paniced when it said it was going to erase everything. Your comments sure did help jog my memory since I am a fairly new classic ipod owner!
So for those of you who would like your music sorted into folders and then your separate playlists in them, this is what I'm now doing (translation--what I learned to do!) 1. In itunes make your playlist folder, and then copy each of the playlists you want in it. Ex. folder-Christmas; playlists in it--The Chipmunks Christmas, Mannheim Steamroller Christmas Eve, etc. Do that for each kind of folder you want. (I ended up with 17 different folders!) 2. Connect your ipod and select to sync selected playlists, not manual. Go to the music tab and check sync music, selected playlists, making sure everything is checked that you want to sync including the folders themselves. 3. Disconnect your ipod when it says its completed. 4. When you want to sync additional music or folders put them in the itunes playlist. connect your ipod, make sure your setting is still on sync selected music. 5. When you click on the music tab make sure everything is checked that you added new and also the music that is already on your ipod. When itunes syncs it, only the new music will be added so the time will be only for the new stuff.
Lesson learned--Keep your itunes playlist area exactly the same as you want it on your ipod and keep the setting at sync selected playlists making sure everything is always checked that should be on the ipod.
Again, thanks for listening and I hope this helps others as well.
Have a Great Summer!