Sorry. Misread your post. Right click on anything other than Inbox on the folder tree on the left & choose
New Subfolder, name it, then where it says
Create as a subfolder select the account &
Choose this for the parent..

Followed by:

QUOTE
When I was looking at your picture, it seemed like you had Yahoo running w/ T.B. Is that true?
Yes I do use Yahoo with Thunderbird.
Boy what a bad day!