Same problem here– but the folder fix doesn’t work for me. If I have a masked smart-object with a layer-style applied (glow). I would need to apply that style to the folder-mask now, since my smart object can’t have a linked mask– but you can’t apply styles to folders. So I’m still out of luck. This was an issue in CS2 that I EXPECTED to be fixed in CS3 without question. Guess I’ll have to wait another 2 years to spend another $700 to get something fixed that should have worked in the first place. Grrrr!