Folder rename restores children original names

I don't know enough about the product to provide that answer. The menu item folder (the parent item in this case) was created originally as a folder on the desktop from right-click -> New -> Folder. Then the shortcuts to the program items (in this case the children) were added to the (parent) folder. Then I moved the (parent) folder to True Launch Bar.

So is that a virtual folder? I'm not too sure about where I should be placing virtual folders (I see you specify a location to store them).

Obviously, I need to educate myself on what the difference is between 'virtual' and I'm assuming a non-virtual folder. How do you identify a virtual to a non-virtual folder?