Problem Symptom:
If you installed SP1 (Service Pack 1) in Windows 7 and try to move a file or folder in Windows Explorer, you get "Item Not Found" error message:

Reason:
This problem might occur if you disabled "Libraries" feature in Windows 7 using Registry trick as mentioned here.
Please note that we are also using the same trick to disable Libraries feature in Windows 7 but we didn't face any problem while moving/copying file and folders even after installing SP1.
Solution:
Simply run the "Restore Default Settings.reg" file stored in the ZIP file given in following tutorial:
How to Disable "Libraries" Feature in Windows 7?
Once you restore the settings, your problem will get fixed.
Thanks to our reader "veegertx" for bringing this issue to our attention...
Posted by: Vishal Gupta | Categories: Troubleshooting, Windows 7
JJ
I think you will find that the problem referenced here runs much deeper than this. The problem can be triggered, or not triggered, by the tweak listed here. The problem can occur on a fresh install. The problem has been discussed for countless pages by software testers and programmers.
social.technet.microsoft.com/Forums/en-US/w7itproui/thread/c8b1f896-bbb7-43b8-be8e-5d28916268e0
social.technet.microsoft.com/Forums/en-US/w7itproui/thread/09fd46ff-65f1-4fa7-ae2d-9f3b2644fad6
social.technet.microsoft.com/Forums/en-US/w7itproui/thread/8afb8b65-900c-4f42-b1df-3c2394417b6e
Many professionals, including those with Microsoft, wished that this "fix" would work.