At the filesystem level, both files and directories have a "read-only" attribute. Both can be set using the attrib command from the command line. However, from within the Windows GUI, the read-only attribute cannot be adjusted for directories, only for files.
When Windows presents a directory as a folder within the GUI, the +r flag is only used to determine whether that folder has been customized or not, e.g. with a background. Other than that, this flag is ignored by Windows and this flag is not displayed for a folder anywhere in the GUI. Folders can be deleted and written to regardless of this flag because Windows doesn't care about this flag when it comes to deleting or writing to the folder.
The only exception to this appears to be when an attempt is made to delete the folder using the 'rd' command from the command line. This is the only case where the +r flag on a directory is honored by Windows for it's named purpose.
This KB article is for earlier versions of Windows, but still applies: http://support.microsoft.com/kb/326549
As indicated by the folder properties dialog box, this check box in the GUI indeed only applies to files:
This check box has three states:
- A square: The state that is shown every time the properties dialog box for any folder is opened. All folders show this state when the dialog box is opened and no changes are made. When the checkbox is in this state, it tells Windows to do absolutely nothing to the read-only attribute of files when APPLY or OK is pressed.
- A checkmark: When this state is selected, it directs Windows to set the read-only flag on every single file within the folder when APPLY or OK is pressed.
- Cleared/No Check/No Square: When this state is selected, it directs Windows to clear the read-only flag on every single file within the folder when APPLY or OK is pressed.
So from within the GUI, the ability to write to and delete files is controlled through both NTFS permissions and the read-only flag. Folders, on the other hand are controlled through NTFS permissions only as detailed in the previous answer.