(in addition to mindless.panda's answer)
The Windows Folder Search issue that files aren't found while folders are, lies in your indexing options. You have probably unchecked some or all file extensions. Since folders can't have extensions, they will always be found regardless of your index settings.
Control Panel » Indexing options » Advanced » File types
I for myself also disabled most of those extensions, so the Start Bar search will show only .exe and .lnk files (programs: yes, junk: not) and becomes usable again.
This leads to your issue where folder search can't be used the way before. To get the best of both worlds, disable the index only for folder search queries. Mindless.panda already showed a good start, but forgot to mention the exact option:
Menu bar » Tools » Folder Options » Search and enable this option
With index Without index
(only one hit) (all possible hits)