Folder creation hangs in IE

[LittleClau]

When creating a new folder and selecting the option from the folder tree, IE tries to download a temporary file and opens a dialogue box asking me what I would like to do..Open, Save or cancel. I've tried all three options but it always leads to the page hanging (the little blue timer under the folder tree option just keeps spinning).

The Dialogue box says:

File Download Security Warning
Do you want to save this file, or find a program online to open it?
Name: forme69fe466
Type: Unkown
From: www.foo.com

So I cannot create a new folder within the group. It just keeps placing it outside of the group and then I cannot access the folder from the Main folder menu