Folder Creation and move not working

Folder Creation and move not working

I went into a folder (depth 6) and used the "new folder" command in the exploer tab to create another folder within the one I was in ( so it shouldbe depth 7).
 
The folder was not created in the folder I was currently in, It got created in the root - ?
 
When I tried to move this folder to its correct place I got " maximum depth" error - But I was informed that the maximum depth is 10 folders ?
 
This also happend with a new sheet I created - why are these documents not being created in the current folder? it becomes difficult to locate and move them from the root to the correct folder.
 
Rajesh