I have not tried DVDFab on Windows 7--only once on XP as a trial. Are you using the 30-day trial or full version? It is possible that some features are not fully-available in the trial version--or at least that's what I have found with various media software that I have tried.
Since this is a question specific to DVDFab you might be better off posting a question on their forum: http://forum.dvdfab.com/
Maybe the FAQ section will help: http://www.dvdfab.com/faq
I entered the keyword "folder" in the search field and got a page of topics. Perhaps one of them may apply to your situation so try it out to see what you get.