Can not play folder full of video file by right clicking on folder and play with VLC

VLC wont open folders.. it shows the folder name in the playlist but it wont expand or play.. can add files individually..If I right click on playlist and use "add folders", the folder name appears on the playlist with a media file icon, which does not open. If I double click on it or click on play button it does not expand. It looks like VLC tries to PLAY the folder which after couple of seconds stops trying without issuing any errors.

If I simply drag and drop the folder into playlist area, still it will not do anything. However, the icon beside the folder name now looks like a blue folder icon. Still no expansion etc.

If I add media files manually to the playlist (I mean not adding folders directly), everything works fine. This was not a issue before VLC 2.1.2 . https://forum.videolan.org/viewtopic.php?f=14&t=116606 . I jhave tried on both windows 32 bit vista and Linux 64 bit Ubuntu.