When you set a folder picture via the Customize tab in folder properties or by editing the Desktop.ini file manually, the folder thumbnail may show up with white border in Windows 10, as in the image below.
Folder thumbnail behavior in Windows 10.
When the same folder picture is used in Windows 8 or earlier, the folder thumbnail would show up stretched, like this:
Folder thumbnail behavior in Windows 8 and earlier
From what I’ve seen, most people seem to like the latter style (which looks neat) than the one with white border.
White Border Shown Only for Square images
This is due to a UI change in Windows 10 that you may not like. After playing with different settings, I found that this only happens for perfectly square images (like 200×200, 250×250 etc.)
Non-square images appear stretched as in pre-Windows 10 style, and square ones are scaled down visually and shown with border, as compared in the following screenshot.
Remove White Border in Folder Thumbnails
To show the stretched folder picture in thumbnail view as in figure 1 above, all I had to do was edit the hidden file named folder.jpg using Paint, and crop it (200×199 or something, from 200×200) so that it’s not a square image.
However, before modifying folder.jpg, you may need to remove the System, Hidden and Read-Only attributes for the file. To do so, open a Command Prompt window and type:
cd /d <folderpath>
attrib -s -h -r folder.jpg
Edit folder.jpg using Paint or any image editor of your choice and crop it. You may need to refresh or rebuild the thumbnail cache after saving the file.
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