When double-clicking on a folder in Windows Explorer list window it opens a new window. Tools->Folder Options->Open each folder in same window is selected.
How can I find which plugin or application is messing with this behavior? And fix it.
Check Tools > Folder Options
On the General tab (I think it's still there in Windows 7*), there's an option called "Browse Folders". Make sure the "Open each folder in the same window" option is selected.
* I can't double check at the moment as I don't have access to a Windows 7 machine at the weekend.
I know this is a little old but I resolved this by changing the mentioned setting to "Open each folder in it's own window" and clicked Apply and then I set it back to "Open each folder in the same window" and clicked Apply again.
Organize->Folder and search options->Open each folder in it's own window
Organize->Folder and search options->Open each folder in the same window