If you are playing around in the Live Mesh CTP, you can find here a sample, how to create a folder in the Live Mesh Environment.

The sample code included there seems to be outdated for the actual version. If you follow the description step by step the result won't show a new folder on your Live Mesh Desktop.

The error lies in Step 5.

The sample code has to be changed from:

<entry xml:base="https://user-ctp.windows.net/V0.1/Mesh/"
       xmlns="http://www.w3.org/2005/Atom">
    <title type="text">Test Folder 1</title>
    <summary type="text">A test object created using Atom.</summary>
    <category term="MeshObject"
              label="LiveMeshFolder"
              scheme="Mesh/MeshObject" />
    <category term="MeshObject" scheme="Mesh/Categories" />
</entry>

to:

<entry xml:base="https://user-ctp.windows.net/V0.1/Mesh/"
       xmlns="http://www.w3.org/2005/Atom">
    <title type="text">Test Folder 1</title>
    <summary type="text">A test object created using Atom.</summary>
    <category term="LiveMeshFolder"
              label="LiveMeshFolder"
              scheme="http://user.windows.net/MeshObject" />
    <category term="MeshObject" label="MeshObject" scheme="http://user.windows.net/Resource" />
</entry>

After that, following the next steps you will see a new folder visible on your Live Mesh Desktop.

Hint: The Live Mesh Desktop for the CTP is another than the one available at http://www.mesh.com

Use http://developer.mesh-ctp.com/ instead.