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One can configure for how many local and network folders it will remember the customization with these DWORD values:

[HKEY_CURRENT_USER \Software \Microsoft \Windows \Shell]
BagMRU Size = 5000 (Default - 5000, XP SP1 - 200)

[HKEY_CURRENT_USER \Software \Microsoft \Windows \ShellNoRoam]
BagMRU Size = 5000 (Default - 5000, XP SP1 - 200)

One can clear the customization of all folders by deleting the following subkeys (Sometimes necessary if Windows stops remembering ones customizations):

[HKEY_CURRENT_USER \Software \Microsoft \Windows \Shell \Bags]
[HKEY_CURRENT_USER \Software \Microsoft \Windows \Shell \BagMRU]
[HKEY_CURRENT_USER \Software \Microsoft \Windows \ShellNoRoam \Bags]
[HKEY_CURRENT_USER \Software \Microsoft \Windows \ShellNoRoam \BagMRU]

Note to enable Custom folders one have enable the following option: Control Panel -> Folder Options -> "Remember each folder's view settings". It should be reflected in this DWORD registry value:

[HKEY_CURRENT_USER \Software \Microsoft \Windows \CurrentVersion \Explorer \Advanced]
ClassicViewState = 0 (0 = Remember Folder View, 1 = Don't remember)

More Info MS KB Q812003
More Info MS KB Q813711

Related Using Web Content to customize file folders
Related Configure caching of remote customized folders in WinXP

Credits ntfaq.com