I've found a way to get folders into the Start Menu - not the way I'd like to do it, but it works.
1. Right Click on the Start Button, click Properties, Start Menu, Customise, locate Personal Menu & click Display as a menu
2. Open Windows Explorer, Users,'username', then add folders by name to match applications i.e. DVD Burning, Graphics, Mapping, Utilities etc.
3. Open each folder in turn, then click on the Start Button, select the application you want to add to the selected folder & drag from the Start Menu to the folder.
4. Repeat for all folders.
Now when you click on the Start Button, your UserName appears at the top right of the opened Start Menu. Click on the UserName & up pops the folders - the only downside is that you also have the default folders - deleting or renaming these create problems so leave alone.
If anyone knows how to create a NEW item on this panel in the Start Menu, I'd be pleased to hear from you.