When you say it won't work with folders, are you talking about physical folders in the servers file system or page type folders?
What I've done in the past is create a custom page type which have the properties you want display and be searchable and then use a file or document attachment field. This method will allow you to set permissions, check in/out, workflow and search without needing any custom code.
Email me, I'd be happy to share what I did to accomplish this.