Scott,
You may have misunderstood my post. I go to Properties/Customize of a folder icon and choose a picture in the folder. The image I posted here was re-created just to get a point across that I wasn't looking for a preview in the folder. I want an image ON the folder.
So I go here . . .
Click "Choose file"
Go here . . .
Select a picture file and the result is this . . .
I over-layed the folder image with a picture, to give an idea of what my result would be. No I let Windows do it. I don't do it for all my folders. Why should I when there is already a way to have it done (if it'd only work!).
By the way, I liked XP, but Windows 7 was just as good. Went from 7 to 10; regret 11, just because of the above.