I had the same issue just over a year ago and I contacted sony help and this is what they sent me. It resolved my issue
Here is their response. I had no idea at the time of what I did for sony vegas to not show folders, and all I had to do was reset the preferences.
Thank you for contacting Sony Creative Software. Try resetting the software preferences:
To reset all preferences, settings and window placement back to their original state, close the program. Then hold down the Ctrl & Shift keys when you start it again. When the program starts to load, you will see a window that asks: Do you want to reset all preferences to default values? To fully reset all defaults, make sure that ‘Delete all cached application data’ is checked. Then choose Yes.
David