I just tried typing in a path. Then created a new folder two ways:
- Using the +New. This worked fine. Focus remained with the new folder, so I could rename.
- Right clicking and selecting New > Folder. This also worked.
So my Windows 11 PC seems to be working as intended. Hopefully, others will find that the issue disappears as Microsoft provides updates for other variants of Win 11.
It does seem concerning that this issue is somehow complicated enough that a general update can't resolve the problem.