I have seen this little issue on Vista and Windows 2008 and would like to know if others have seen it and might know a fix/workaround.

I have a fresh install of either Vista or W2K8 on a PC and have joined a domain. The DC is also a W2K8 server.

From the PC I open up explorer.exe and create a folder on the C: drive (c:\Temp for example).
I add 3 or 4 files to the folder.

Next using explorer.exe (detailed view) I delete one of the files. After it is deleted I hover my mouse over any of the remaining files.
Nothing happens except maybe the file detail line is highlighted.  OK so far.

Now on the DC modify the 'Default Domain Policy' and enable the 'Turn on Classic Shell' GPO.
User Configuration->Policies->Administrative Templates->Windows Components->Windows Explorer

Reboot the PC
Using explorer.exe delete another one of the files and then hover the cursor over one of the remaining files.

I consistently see the file become 'single click' files with the underline.

Disable the 'Turn on Classic Shell' GPO and reboot the PC to fix.

If you read the 'Explaination' for the GPO it states that you lose this functionality if you enable the property.

Can you reproduce it? Is it a bug or is there a fix for the classic shell.?

I showed this to a MS guy today that was teaching a class at our site and he said 'Why would anybody use the classic shell?'
Wrong answer....

Thanks