Error Message

"Cannot create the folder. You do not have permission to perform this Enterprise Vault operation."

The creation of folders in Virtual Vault is controlled by the Desktop policy settings Users can archive items and Users can reorganize items.  If these are set to No then the user will not be able to create new folders in their Virtual Vault.

A Client Trace will show the settings applied to the mailbox in the format:

VVALLOWARCHIVE = 0
VVALLOWREORG = 0 

Where:
VVALLOWARCHIVE relates to Users can archive items
VVALLOWREORG relates to Users can reorganize items

1. Open the Vault Admin Console on the Enterprise Vault server
2. Expand Policies > Exchange > Desktop
3. Right click on the relevant desktop policy and click Properties
4. Select the Advanced tab
5. Select Virtual Vault from the dropdown menu
6. Scroll down to find the settings Users can archive items and Users can reorganize items, set these both to Yes
7. Synchronize the affected mailbox(es) to apply this policy change to the mailbox (see 100017500 for details on how to synchronize mailboxes)

Unable to create a folder in Virtual Vault.