If you select a file from the Local FileSystem node, select Rename, copy and paste the folder name in place, then proceed or close the dialog window, Studio recursively adds folders and folder contents as subfolders, perhaps to the maximum operating system depth.
Steps to Replicate :
1) Select a folder from Local FileSystem node.
2) Select Context Menu > Rename.
3) CTRL+C folder name string.
4) CTRL+V in place.
Actual Results : Please see capture at http://www.screencast.com/t/xxorH2jOc. Even if you close the dialog window, Studio recursively adds the folder and its contents as subfolders, perhaps to maximum folder depth.
Expected Results : this action should not have any effect on the file system.