The change in Jenkins 1.512 which adds support for views containing items child items from within folders is incompatible with the current way the plugin works.
Steps to reproduce:
1. Install folders plugin
2. Create two jobs at root: A & B
3. Create three folders at root: C, D & E
4. In each of the folders create two jobs: C/F, C/G, D/H, D/I, E/J, E/K
5. Mark the following jobs as favorite: A, C/F and the folder D.
6. Create a view with the `Recurse in subfolders` option selected and a regex of `.*` and the Favorites Filter
The view should contain the following items only: A, C/F and D
The view contains: