You should see full folder paths, not just names, in the list. That's what I get if I add folders using the button directly above the list in Preferences and also what I get if I use the Set Color menu.
How did you add those folders to the list? Via a different method? Or maybe there's something special about the folders themselves? I can't find a way to make just the names appear in the list (except hand-editing the config file, heh).
Which version of Windows are you using and is it 32-bit or 64-bit?