After using 'Explorer Toolbar Editor' and learning how to use it, it does not solve the original problem of the lost 'Folders' icon.
The text button to click on is too far to the right, so is not visible when two folders are open side-by-side. As I've been unable to learn how to remove existing unwanted buttons to the left, or remove them I stopped using it.
ETE has no advantage over the normal display. It still requires extra clicks just like the renamed and relocated 'Folders' icon - 'Organize | Layout | Navigation Pane'
Today I discovered 'Explorer++' which solves the problem. It also removes many of the other irritations in W7 when compared to XP. It's also got an 'up' icon.
After only a few minutes use, I'd recommend others to try it, especially as it does not need to be installed, so deleting the .exe removes it! Look here:-
http://sourceforge.net/projects/explorerplus/and here:-
http://explorerplusplus.com/