NoFolderOptions Policy hides Folder Options from Control Panel, and the Folder Options… command under Tools menu in Windows Explorer. The Folder and Search Options command in the Organize menu (in Windows Vista) is grayed out as well.
If your system is not part of any network and this restriction was enabled without your knowledge, it could be caused by Virus or Malware. There are plenty of viruses which enable the NoFolderOptions Policy in the registry, and in addition, hides file extensions for known file types. To get the option back, use one of these methods:
Using Registry Editor
Launch Regedit.exe and navigate to:
Delete the NoFolderOptions value (if found) from the above locations
Exit the Registry Editor.
Using Group Policy Editor
Group Policy Editor is not available in Windows XP Home Edition and Windows Vista Home Editions. For all editions of Windows XP and Windows Vista, you may use the .reg file (under paragraph "Registry fix") to remove the Policy setting.
Note that this only resets the NoFolderOptions per-user Policy, whereas NoFolderOptions can be a per-machine setting as well.
1. Launch GPEDIT.MSC
2. Navigate to the following branch:
3. Double-click Removes the Folder Options menu item from the Tools menu
4. Set it to Not configured
Download folderopt.zip, unzip and run the file folderopt.reg.