Clicking the "Documents" icon launches iPhoto

Clicking the Documents icon in "Favorites" launches iPhoto. The documents icon is somehow linked as an application.
I can only access my Documents folder using the Finder menu Go > Documents, but because the OS thinks this is an app, I can't add new folders to the Documents folder or otherwise organize my files.
How do I fix this?!?
Many thanks!

Triple-click the line below to select it, then copy the selected text to the Clipboard (command-C):
xattr -c ~/Documents
Paste into the Terminal window (command-V). You can then quit Terminal. Try the action again. If the same thing happens, relaunch the Finder by selecting
 ▹ Force Quit ▹ Finder
and pressing return or clicking Relaunch.

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