If when you try to move or rename files or folders on your Windows computer, you cannot move or rename files or folders, you get the error message:
The File or Folder does not exist
It is quite likely that the issue is being caused due to deletion of the Registry branch:
If you have installed update KB938979 by (an earlier version of) vLite edited Vista or installed the beta version of KB938979, you are most likely to be facing this problem. Uninstalling the update is not known to help, as its a case of registry corruption. What you need to do is restore the missing registry hive to its default settings. Please ensure that you have indeed installed the KB938979 update.
Download and apply this Fix It from Microsoft.
And yes, best to always create a system restore point first.