Text for folders only?

) I see that I can toggle text on and off for the display function of items on the taskbar. Is there a way to only have text showing for certain items but not for others? What I would like is to have icon-only display for the standard quicklaunch items, but icon-with-text display for my folder menus. Is that possible?

Yes this is possible:
right-click the item you want to change Appearance->Icon and Text

If there are too many items you want to changes right-click any item and select Appearance->Button Properties. You can select some items in the list at the left side

2) I tried out a virtual folder. When I decided to get rid of it, I got a warning that if I deleted the folder I might be deleting it from the drive itself. I trid hiding it instead, but now it shows up under the hidden items. How do I safely remove a virtual folder without deleting it from the hard drive?

Delete the virtual folder with the menu item "Delete" with the red icon. This menu item have the keyboard shortcut "Del". It is safe for "root" button (the menu you've created), if you try to delete something inside virtual folder this will be the real removal.

Other way 100% safe:
right-click the item you want to delete and select "Open in explorer". TLB will open the Windows Explorer window with the item selected. If the item is in the Quick launch folder then you can delete. Anyway you can control the path of the item you want to delete.