This is a known issue that has been there for a long time. The file browser cannot handle folders with spaces in the name correctly and it causes this behavior. The File browser and file manager will not let you create folders with spaces in the name. In web environments it is best to not have spaces in file or folder names as these must be escaped and create ugly urls with %20 etc.
If you remove spaces from the folder names it will solve the problem.
Hope it helps,