If you try to create a new Library on Windows 7 or Windows Server 2008 R2, but you find that you are unable to, then this article may interest you.
Not only will you be unable to create the new library, you may also get the following error message:
Unable to create the file ‘New Library.library.ms’. File system error (16389)
Now, this is the default policy setting in Windows, which prevents users from creating items at the user’s folder root and libraries.
To change the policy, open gpedit.msc and navigate to the following setting:
User Configuration > Administrative Templates > Windows Components > Windows Explorer > Prevent users from adding files to the root of their Users Files folder
This policy setting allows administrators to prevent users from adding new items such as files or folders to the root of their Users Files folder in Windows Explorer.
If you enable this policy setting, users will no longer be able to add new items such as files or folders to the root of their Users Files folder in Windows Explorer.
If you disable or do not configure this policy setting, users will be able to add new items such as files or folders to the root of their Users Files folder in Windows Explorer.
Enabling this policy setting does not prevent the user from being able to add new items such as files and folders to their actual file system profile folder at %userprofile%.
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